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NAME __________________________ ______/_______/20_____ HONORS ECONOMICS MAMMON & MORALITY ECONOMICS’ TWO GREAT INSIGHTS: VIRTUE ? HAPPINESS ♡ “THERE IS NO SUCH THING AS A FREE LUNCH” Ex. Education: Free for Children, Expensive for Taxpayers Grade Inflation Environment & the Economy THE ECONOMIC PROBLEM = ______________ _____________ & ______________ ________________. NECESSITY OF CHOICES & TRADEOFFS a.k.a. “The Microeconomic Principle” or “The Conservative Principle” WHOLE ? SUM OF PARTS >⋃<⨂ “SMART FOR ONE, DUMB FOR ALL” & “DUMB FOR ONE, SMART FOR ALL” Ex. Peacock & Plumage Elk & Antlers Standing at the Stadium “Tragedy of the Commons” LoJack v. The Club __________________& PUBLIC GOODS ; PERVASIVE MARKET & GOVERNMENT _____________ a.k.a. “The Macroeconomic Principle” or “The Conservative Principle” PHILOSOPHY & ECONOMICS: PLATO & ARISTOTLE: VIRTUE = ______________ & HAPPINESS = ____________ ONLY DOING _____________ CAN MAKE YOU T TRULY HAPPY WEALTH = REWARD FOR GOOD BEHAVIOR PUBLIC GOOD = ___________ GOOD HUMANS = _________ ___________ ( ZOON POLITIKON ) GOOD ______________ GOOD CITIZENS ( _____ ____________ ) ENLIGHTENMENT: “In Italy, for 30 years under the Borgias, they had warfare, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they have brotherly love. They had 500 years of democracy and peace, and what did that produce? The cuckoo clock!” ~ Harry Lime in The Third Man MACHIAVELLI: “THE END JUSTIFIES THE MEANS” VIRTUE (___________) ? HAPPINESS (____________) MANDEVILLE: “THE FABLE OF THE ________” _________ ________ PUBLIC VIRTUE (GREED IS GOOD) __________ ______________ THEORIES: INTERESTS OF ___________ ? INTERESTS OF RULED CAPITALISM: ADAM SMITH’S GREAT IDEA: In 1776, ADAM SMITH wrote THE WEALTH OF NATIONS = attacked _______________ & established the intellectual basis for modern _________________. “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour.” DIVISION OF LABOR – ____________________ & dividing production into individual tasks would increase productivity THE “INVISIBLE HAND” – Individuals pursuing their rational _______--_____________ & guided by the _________ ___________’s “Invisible Hand” served the public interest The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest . . . they intend only their own gain, and they are in this, as in many other cases, led by an invisible hand to promote an end which was no part of their intention. Nor is it always the worse for the society that it was no part of it. By pursuing their own interest they frequently promote that of the society more effectually than when they really intend to promote it. FREE LABOR* – “_________ __________ ____ _________” – The value of a good or service = labor required to produce it Smith identified the core elements of modern capitalism: 1) Free Labor, 2) __________________ mode of production, & 3) Market system of exchange among individuals who ______________ _______________ their own self-interest VIRTUE AS VICE: CLASSICAL ECONOMICS = “NO SUCH THING AS A ________ ______________” GOVERNMENT INTERVENTION DISTORTS MARKETS SUPPORTED ____________-______________ POLICIES MALTHUS = FEEDING THE POOR ____________ _____________ FAMINE & ENVIRONMENTAL DEGRADATION _____________ WANTS / LIMITED ______________ The power of population is indefinitely greater than the power in the earth to produce subsistence for man . . . the superior power of population cannot be checked without producing misery or vice. ~ Thomas Malthus RICARDO = PROTECTIONISM ___________________ HIGHER PRICES FOR ___________________ NATIONS SHOULD PRODUCE ACCORDING TO THEIR ____________________ ___________________ MORAL ECONOMY & THE SPIRIT OF CAPITALISM: MOST RELIGIONS PREACH COMMUNISM – MORAL ECONOMY – IN THEORY IF NOT IN PRACTICE – RESTRICTIONS ON ___________ -- See The Merchant of Venice – YEAR OF ____________________ – ZAKAT / NOBLESSE OBLIGE -- Purpose of $$$ = Give it Away – _________ PRICE – INDIFFERENCE TO MATERIAL WEALTH – MERCHANTS = LOW SOCIAL STATUS Something funny happened on the way to the rapture . . . _________________ – PURITANS & PILGRIMS – (WEBER THESIS) WEALTH REVEALED DIVINE _________________________ – LITERATE POPULATION ______________ ______ ___________ Bible churches required literacy among the laity – WORK IS TO PRAY; PRAY IS TO WORK CAPITALIST _____________ __________ (WORK AS VOCATION) “Laborare est Orare” – INVEST RATHER THAN SPEND WEALTH __________ _____________ Make money, but not spend Savings & Investment – RATIONAL ___________________ : IDLE HANDS DEVIL’S WORK TIME IS MONEY Protestants = Invention of the mechanical clock Clock Towers replace Bell Towers and Minarets* LAISSEZ-FAIRE & SOCIAL DARWINISM: LAISSEZ-FAIRE ? __________ ____________________ SURVIVAL OF THE FITTEST MARKET = ____________ _________________ COMPETITION = NATURAL LAISSEZ-FAIRE = ___________________ REFORMERS = ________________ LAISSEZ-FAIRE LINKED TO _________________ ________________. • ENGLISH __________________ (NOBLES) KEPT OUT IMPORTED GRAIN HIGH FOOD COSTS FOR URBAN WORKERS HIGH LABOR COSTS FOR CAPITALISTS (CAPITAL & ___________ vs. LAND) = SOCIAL DEMOCRACY • AMERICAN “_____________ _____________” CREATED MONOPOLIES OVER STEEL, OIL & TRANSPORTATION LOW AGRICULTURAL PRICES & INDUSTRIAL WAGES (LABOR & LAND vs. ___________) = POPULAR DEMOCRACY • GERMAN TRADE UNIONS HIGHER WAGES & WELFARE LOWER RETURN ON INVESTMENT & LOWER LAND RENTS (_____________ & CAPITAL vs. LABOR) = FASCISM MARX STRIKES BACK: MARX: CLASSICAL ECONOMICS = “______ _________” MARX: HISTORY = _______ ____________OVER THE ________ _____ _______________ DIVISION OF LABOR ________________________ WORK = NO LONGER MEANINGFUL COGS IN A MACHINE WITH NO PURPOSE “INVISIBLE HAND” _________________________ CONFLICT, NOT HARMONY CAPITAL EXTRACTS LABOR’S “__________ __________” ____________ VALUE vs. ________ VALUE FETISHISM FREE LABOR _________ _________________ LIVE TO WORK, NOT WORK TO LIVE CAPITALISM = INHUMANE “The development of civilization and industry in general has always shown itself so active in the destruction of forests that everything that has been done for their conservation and production is completely insignificant in comparison.” “The more the division of labor and the application of machinery extend, the more does competition extend among the workers, the more do their wages shrink together.” “Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth - the soil and the labourer.” “Sell a man a fish, he eats for a day, teach a man how to fish, you ruin a wonderful business opportunity.” “Anyone who knows anything of history knows that great social changes are impossible without feminine upheaval. Social progress can be measured exactly by the social position of the fair sex, the ugly ones included.” KEYNESIAN REVOLUTIONS: VICTORIANS: ECONOMIC DOWNTURNS = “COLD ___________” THAT “PURGED THE ROTTENESS” OUT OF THE SYSTEM AFTER THE “___________ _____________” & GREED OF THE BOOM YEARS NO PAIN, NO GAIN BINGE & PURGE _______________ REJECTED VICTORIAN MORALITY: _______________ DID NOT IMPLY A _______ OR A SINNER “BALANCE SHEET” THINKING REDUCING SPENDING WHEN INCOMES SHRINK _______________ _____ ____________ YOU CAN’T SAVE YOUR WAY INTO ECONOMIC RECOVERY “The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn't deliver the goods.” “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” “Education: the inculcation of the incomprehensible into the indifferent by the incompetent.” GOVERNMENTS SHOULD ___________ _________ – NOT LESS – WHEN INCOMES & REVENUES DECREASE -- “SPENDER & LENDER OF LAST RESORT” MARX WAS RIGHT: CRITICS: MARX = _________________________ • • • PREDICTED “_________________” SOCIALIST REVOLUTION FAILURE OF “MARXIST-LENINIST” REGIMES IN RUSSIA & EASTERN EUROPE _____________________ OF STATIST ___________-_______________ ECONOMIES IN INDIA & LATIN AMERICA PUBLIC SECTOR SPENDING = __________________ IN ALL DEVELOPED COUNTRIES IN THE 20TH CENTURY 30% TO 60% OF GDP MARX: CAPITALISM HIGHER _______________ ___________________ OF RISK & REWARD • • • • & _______________ SOCIALIZED EDUCATION (PUBLIC EDUCATION) SOCIALIZED ____________ _________________ SOCIALIZED _________________ (SOCIAL SECURITY & 401(k)) SOCIALIZED BANKING (FEDERAL RESERVE & FDIC) MARX CORRECTLY IDENTIFIED THE IMPACT OF __________________, MATERIALISM (“___________” COMMODITIES), & GROWTH OF _______________ ______________/ BUREAUCRACY ECONOMIC TYPOLOGIES: POLITICO-ECONOMIC SYSTEMS: