Chapter 14 – Capitalism and the Economy

economic system in which property and goods are primarily owned privately; investments are determined by private decisions; and prices, production, and the distribution of goods are determined primarily by competition in an unfettered marketplace.

Capitalism

precapitalist economic system characterized by the presence of lords, vassals, serfs, and fiefs.

Feudalism

the period around 1700 marked by the introduction of new farming technologies that increased food output in farm production.

Agricultural revolution

a legal entity unto itself that has a legal personhood distinct from that of its members, namely, its owners and shareholders.

Corporation

a condition in which people are dominated by forces of their own creation that then confront them as alien powers; according to Marx, the basic state of being in a capitalist society.

Alienation

an economic system in which most or all the needs of the population are met through nonmarket methods of distribution.

Socialism

a political ideology of a classless society in which the means of production are shared through state ownership and in which rewards are tied not to productivity but to need.

Communism

a wage paid to male workers sufficient to support a dependent wife and children

Family wage

the section of the economy that involves providing intangible services.

Service sector

the unequal, global distribution of income, so named for its shape.

Champagne-glass distribution

the form of business that occurs when one seller of a good or service dominates the market to the exclusion of others, potentially leading to zero competition.

Monopoly

the condition when a handful of firms effectively control a particular market.

Oligopoly

a business decision to move all or part of a company’s operations abroad to minimize costs.

Offshoring

an organization of workers designed to facilitate collective bargaining with employers.

Union

a company’s assault on its workers’ union with the hope of dissolving it.

Union busting

Your grade level and amount of experience determine your:

civil service salary

Adam Smith argues that money is:

inherently social

Adam Smith used an example of a pin factory to describe the benefits of division of labor to produce greater wealth. The division of labor does this by producing:

goods that society desires; proportions that society desires; prices society is willing to pay (all of the above)

Which theorist claimed that modern capitalism would not have arisen without the Protestant Reformation, which created the necessary social conditions for capitalism by creating theological insecurity and instilling a doctrine of predestination?

Max Weber

Marx described workers as being alienated from:

the process of production; other people; themselves (all of the above)

In the United States, corporations share many of the same rights as individuals, except corporations:

can’t vote

Under feudalism, the lords did not receive the profits from the land that they owned. Who did?

vassals

Because the monetary system is increasingly depersonalized, Simmel argues that it is now possible to:

do shoddy work

An honorarium is similar to:

a gift for something you have agreed to do for someone, like giving a speech

Globalization in the twenty-first century is characterized by:

the emergence of new markets, new means of exchange, new players, and new rules that are intensifying worldwide interdependencies

Henry Ford was heralded for his generosity and genius when he created a new type of wage system whereby male workers were paid sufficient wages to support a dependent wife and children. What term refers to this type of payment?

family wage

The Ozzie and Harriet Nelson type of family was in its prime during which time period?

during the post-World War II economic boom

Union membership has been declining since the 1950s. Which of the following has NOT been suggested as a reason?

Union employees are less efficient.

In a capitalist economic system, the price and distribution of goods and services are determined by what?

competition

Sarah Fenstermaker Berk has characterized the American family by examining how women and men learn to take on distinct roles paralleling the divide between public and private spheres. She calls the family a:

"gender factory."

Barbara Risman equated gender inequality, in the form of marriage, to:

At best, racism and at worst, apartheid

What term refers to the ability to carry out one’s own will despite resistance?

power

An oligopoly occurs when sellers of a certain product join together and decide to _____________ supply to _____________ demand, all in an effort to raise profits.

reduce; increase

Monetization refers to:

the establishment of a widely accepted currency for exchange.

The dominant economic system before the agricultural revolution was

the feudal system

Feudalism was an economic system characterized by ________

lords who owned the land, vassals who managed the land and offered military protection, and serfs who worked the land

During the agricultural revolution, the enclosure movement caused many former serfs to move to cities in search of work and led to the rise of:

wage labor

what are features of capitalism?

capitalism is an economic system in which property and goods are primarily privately owned; investments are determined by private decisions; and prices, production, and the distribution of goods are determined primarily by competition in an unfettered marketplace

At the end of the eighteenth century and the beginning of the nineteenth century, a massive transition was propelled by the development of new technologies, including:

power loom and steam engine

Which of the following factors played a role in the development of capitalism?

new farming technologies

A corporation is legally:

an individual

Limited liability is ________

a form of ownership that creates a division between the individual shareholder or executive and the business entity.

The idea that competition, not conflict, helps maintain social cohesion was put forward by _______

Adam Smith

You are a freelance graphic designer, and about six months ago you set up a PayPal account so that clients can pay you online instead of mailing you checks, in order to speed up the process. One of your clients has not expressed any interest in using PayPal, and it continues to take up to two months for that client to pay you. The next time this client offers you a project, you decide to turn it down in favor of clients who will pay more quickly. In Adam Smith’s terms, your decision is based on finding an unacceptable level of ________ in the proposed exchange.

inefficiency

________ is a system of payment whereby workers are compensated for the sum total of their services, not any specific task or hours worked

salary

Adam Smith, the father of liberal economics, determined that groups of individuals pursuing their own self-interest manage to stay intact and not fall into the chaos of civil strife because:

individual self-interest in an environment of others acting similarly will lead to a situation of competition.

According to Adam Smith, what is the most efficient way to produce something?

through a division of labor that breaks production into its constituent parts

Georg Simmel saw the development of monetary payment systems as part of a historical evolution leading to

depersonalization of exchange

According to Georg Simmel’s view of monetary payment systems, which of the following people is in the best position?

Georg Simmel argued that a civil service salary is best because the payment is not tied to the productive value of the workers but related to the "appropriate standard of living

According to Karl Marx, workers in a capitalist economy are alienated from the product(s) they produce because ________

the production process is broken down among several people.

Socialism can be defined as ________

an economic system in which most or all of a population’s needs are provided through nonmarket methods of distribution.

Max Weber highlighted the ability of ________ to generate social change.

ideas

What is the correct term describing an economic system characterized by the presence of lords, vassals, and serfs?

feudalism

What is the major reason unions are on the decline in the United States today?

People don’t trust unions, saying they are corrupt and outdated

Offshoring occurs when firms:

move all or part of their operations abroad to developing nations

What characterized the "new markets" that are part of globalization?

They are primarily financial and not bound by geography; anyone anywhere with the proper equipment can participate

A union allows workers to join together to promote their:

collective interests

Levi Strauss has a corporate code of conduct regarding labor that says:

any contractor working with Levi Strauss must conform to good labor practices

Some people consider corporations to be "psychotic" because corporations:

show little regard, remorse, or guilt for harming others

Payment per unit, or piecework payment, has more freedom than in-kind payment because:

the worker can do whatever he wants with the cash

Some critics claim the Carlyle Group uses insider political knowledge, or ____________, to dominate heavily regulated markets.

political arbitrage

Most economists, policy analysts, and well-informed Americans say that the single policy that caused the credit bubble and bust of the 2000s was the repeal of the:

Banking Act of 1933

Because Ford created the "family wage," he was:

heralded for his generosity and genius

What is the name of the economic system that developed along with the agricultural revolution and Industrial Revolution in Europe?

capitalism