"How can we explain the change from a world in which living conditions changed little unless there was an epidemic or a war, to one in which each generation is noticeably, and predictably, better off than the previous one? An important part of our answer will be what we call the capitalist revolution: the emergence in the eighteenth century and eventual global spread of a way of organizing the economy that we now call capitalism." (Core Econ, Chapter 1).
In today's class we will begin to discuss the characteristics of capitalism, the institutions that define it, and its role in the increasing standards of living that the world has experienced since its inception.
You should have read the following sections in Chapter 1 ("The Capitalist Revolution") of Core Econ:
1.6 Capitalism defined: Private property, markets, and firms
1.7 Capitalism as an economic system
1.8 The gains from specialization
Write a blog post about the sections you read for homework, relating the ideas in the reading to the country you have chosen to study.
Share a question that you would like to discuss as part of our Socratic Discussion today.
Participate in a Socratic Discussion. This rubric will be used to evaluate your blog post and discussion.
Read the following section in Chapter 1 ("The Capitalist Revolution") of Core Econ: 1.9 Capitalism, causation and history’s hockey stick.
Podcast: In this podcast Dennis Rasmussen discusses his new book, The Infidel and the Professor. In the book and the podcast he explores the deep and enduring friendship between Adam Smith and philosopher David Hume, twelve years Smith's senior. How did their friendship and works influence each other? What circumstances of time and place have made their influence so profound? And how were the two men able to sustain such a meaningful friendship when they spent practically no time together? In regard to our class discussion today, Rasmussen discusses how both philosophers had a benevolent view of commerce and capitalism but Hume's was more uncritical than Smith's. He also discusses their view of how capitalism has virtuous effects on human behavior and morals.
Podcast: In this podcast, Peruvian economist Hernando de Soto argues that ensuring property rights for the world's poor could unlock trillions in ‘dead capital’. According to de Soto, the value of extralegal property globally exceeds 10 trillion dollars. Nobody has ever disputed that property rights matter for investment: experts point to a direct correlation between a nation’s wealth and having an adequate property rights system. This is because real estate is a form of capital and capital raises economic productivity and thus creates wealth. Mr de Soto's understanding – that title frees up credit, turning ‘dead capital’ into ‘live capital’ – has prompted governments in other countries to undertake large-scale property-titling campaigns.