Key Concepts for any economic system:

Division of labor - Humans band together into societies for existence-island economy
Specialization (payment) barter- wage, rent, profit
Roundabout production processes - how do we get to investment? NOW?

Material conditions (material life -the routines of daily life-tastes and tech.)
Economic life - activity or routines of work day

Economic System- a method of solving problems- of organizing for production and distribution - constitutes a mode of life

Market ----Mixed--- Command arrangement that exists to solve economic problems...

Market - allocates

What is produced/consumption - $votes *individualism

How it is produced/production - owners of production - *private property

For Whom / distribution -$votes

Development of Capitalism from early feudalism. Before feudalism, tribes, slave states, communities/city states. Feudalism is directly linked to the emergence of mercantilism and mercantilism into early capitalism. Inherited from Britain and Norman ancestors.

How did capitalism emerge form other economic systems ?

Early Greek and Roman societies - slave societies - conjured peoples/ lived at subsistence. Little production among the artisans, soldiers, thin moral fabric - social and political weakness

Nomadic Societies - monotheism, Christianity, Judaism, Islam 8th century tribal leadership.(Middle east cradle of civilization - villages/towns/specialized labor/pooled supplies-crafts profession...invented writing/wheel/bronz/Hammurabi Code (2500 bc)

Feudalism filled a vacuum in some areas - slavery directly into feudalism - Invaders attacked often, and enough. Tribal leaders became kings of feudal estates.


Enduring economic systems need - A Common Ideology- or belief system to justify a societies social and economic relationships.

Ideology of Feudalism: CHRISTIAN PATERNALIST ETHIC - to justify and reflect the status quo

1. Judeo Christian Moral Code

a. All are children of God

b. Keepers of brothers and sisters

c. care for poor is a duty

d. charity and almsgiving is a duty

(Anti-capitalist nature of these aspects of feudalism personified by St. Thomas)

2. Private Property

a. Justified only because of its necessity to almsgiving

b. Distributed by King

3. Acceptance of one's station in life

4. Condemnation of lust for Wealth - acquisition reduced

5. Just Price - compensation, no profit/ usury a sin and a crime

Feudal Institutions -


William the Conqueror 1066/ England with normans

10-12 centuries land in narrow strips

1/5 King

1/4 Sr. Vassals bound by marriage to king

1/4 Church (loyalty)

rest to French Barons

12th century money rents.

Lords - protected the weak - governed by CUSTOM AND TRADITION

Serfs - tied to the land - use the land - various degrees of freedom and service.

Manor - land

Guilds - artisans and production units - guaranteed quantity and quality secondarily - religious organizations

Catholic Church - Early land owner

Belief system/spiritual in function of ec. system

Decline of feudalism began in the 12th -18th centuries

1. Technical change

a. crop rotation 2 to 3 (8th to 11th centuries)

b. transportation (carts to wagons) (horses - plow)

c. population doubled 11th to 14th century

2. Urbanization and trade - increased population and commerce/Medevil Merchants

3. Wages and rents. 1301 peasant revolts/ black death 1348 1/3 of population

100 years war with France 1337-1487 - food and $ 15 th Fixed rents-

fixed rents and inflation hurt noblemen

4. Crusades 10-13th century (trade in Africa & Asia --Urban Science)

5. Putting out system replaced guilds - in organization of the production of goods

Need for greater manufacturing - raw materials to workers)- small entrepreneur replaced by merchant capitalist (capitalist owned all stages

6. Decline of the manor - cities and enclosure (increased the power of the market)

7. Corruption of the church - thrown out by Henry VIII in 1548 - a political & economic move

8. Rise of the nation-state (reduced power of Nobels - taxes - armies - bureaucrats- to finance wars. (from Feudal Monarchy)

9. Enclosure 1600s- peasants to cities, legal changes, consolidated holdings, sold land, rise of the gentry, increased productivity

10. Rise of the merchant between the producer and the consumer

Merchant--the key actor in the next phase of the transition to capitalism. U.S. a colony to the Civil War period.*



Rise of U.S. and U.K. colonies

1. Trade monopolies

import cheap - export dear - strong legal regulation

2. Excluded foreign rivals

3. During shortages decrease exports

4. Decrease imports - prohibit and protect

5. Navigation acts - X on UK ships - penalties of production

6. State assumed the old craft/guild function

Central control over workers and accounting (Colbert and Louis 14th)

Changes -

Middle class upset - Hurt rising capitalists - monopolies and new middle class - protected old (by 1776)

Rise of Individualism and role of state - decreased influence of church

early protestants work ethic massacre of peasants

Civil War (1648-60) and Glorious Revolution (1688) 100 years philosophy to shift.

Mercantilism became useless - non profitable to the state - slave trade and colonies became expensive- particularly if they wanted to revolt.

Rise of Classical Liberalism

1. Psychological Creed - Egoism- Atomism (individuals, not society)

(coldly calculating)

(assumes workers are lazy and inept)

2. Economic Creed

- Division of labor (collective good) - vent egoism - capital accumulation

3. Political Creed

- defense

- public goods

- laws, against injustice


What are some Goals of an Economic System?

What are some characteristics of the U.S. Economic System?

3 keys in capitalism - Hard to imagine without


private property