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CAPITALISM AND EMPIRES: NEW ECONOMICS/OLD POLITICS Reading: Reading: Smith, et al., 672-673.

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Presentation on theme: "CAPITALISM AND EMPIRES: NEW ECONOMICS/OLD POLITICS Reading: Reading: Smith, et al., 672-673."— Presentation transcript:

1 CAPITALISM AND EMPIRES: NEW ECONOMICS/OLD POLITICS Reading: Reading: Smith, et al.,

2 How Did Economics Change Around 1500? Mercantilism: traditional European economyMercantilism: traditional European economy –European idea that economy of a society is organized to benefit ruler –Heavy involvement of government in economy –Gold/silver – bullion central to economy –With colonies – notion that colony exists for benefit of “Mother” Country – ruler of mother country Colony provides raw materialsColony provides raw materials “Mother” Country uses raw materials to make manufactured goods that are sold to colony“Mother” Country uses raw materials to make manufactured goods that are sold to colony

3 Capitalism: Private individuals or corporations have clear ownership of property/means of productionCapitalism: Private individuals or corporations have clear ownership of property/means of production –Individuals/Corporations act economically to make profits for themselves Goal is to sell goods for more than it costs to produce themGoal is to sell goods for more than it costs to produce them Profits can be used as capital to reinvest in economic activities/productionProfits can be used as capital to reinvest in economic activities/production Belief in laws of supply and demandBelief in laws of supply and demand Belief (in theory) that the best economy is one with little or no intervention of governmentBelief (in theory) that the best economy is one with little or no intervention of government

4 Who Is Rich and Who Is Poor? Society’s wealth in old economy: amount of bullion in ruler’s coffers (could be product of trade or taxes)Society’s wealth in old economy: amount of bullion in ruler’s coffers (could be product of trade or taxes) Society’s wealth in capitalist economy: GNP or GDP – Gross National Product or Gross Domestic Product (Both are simple measures of total amount of goods and services a society produces) – usually measured as Per Capita GNP or GDP which means that the total value of the goods and services of a country are divided by the total population of the countrySociety’s wealth in capitalist economy: GNP or GDP – Gross National Product or Gross Domestic Product (Both are simple measures of total amount of goods and services a society produces) – usually measured as Per Capita GNP or GDP which means that the total value of the goods and services of a country are divided by the total population of the country

5 What is the role of the individual in society? In traditional economies: mostly to feed themselves and families, provide taxes for rulers – produce what they can, which is mostly enoughIn traditional economies: mostly to feed themselves and families, provide taxes for rulers – produce what they can, which is mostly enough In capitalist economies: there is never enough – wealth comes from individuals pursuing their own self-interest to get the most possible by exchanging their labor or goods in a “free” marketIn capitalist economies: there is never enough – wealth comes from individuals pursuing their own self-interest to get the most possible by exchanging their labor or goods in a “free” market

6 Tensions from European Changes Europeans begin wild search for trade and territoriesEuropeans begin wild search for trade and territories Europeans begin to explore ways of gaining new marketsEuropeans begin to explore ways of gaining new markets Traditional economies remain heavily influenced by rulers – want taxes more than tradeTraditional economies remain heavily influenced by rulers – want taxes more than trade For traditional economies – what they produce is enough – if Europeans want more of something that is their problemFor traditional economies – what they produce is enough – if Europeans want more of something that is their problem For capitalist Europeans: there is never enoughFor capitalist Europeans: there is never enough

7 Pyramid Shaped Societies Traditional Societies organized as PyramidsTraditional Societies organized as Pyramids –Ruler (King, Sultan, Czar, Emperor) at top –Surrounded by very small group of elite advisors –90% of pyramid contains everyone else

8 Society exists for benefit of rulerSociety exists for benefit of ruler Biggest needs related to desire to expand empiresBiggest needs related to desire to expand empires Religion often glue/ often largest problem ruler needs to deal withReligion often glue/ often largest problem ruler needs to deal with People mostly do not matterPeople mostly do not matter

9 Problems with Pyramid Shaped Societies When rulers good, can function very wellWhen rulers good, can function very well When rulers weak, can have main problemsWhen rulers weak, can have main problems How do you get rid of incompetent ruler?How do you get rid of incompetent ruler?

10 Sovereignty What is sovereignty?What is sovereignty? Where does it lie in a Pyramid-Shaped society?Where does it lie in a Pyramid-Shaped society? Where does it lie in the contemporary U.S.?Where does it lie in the contemporary U.S.? Key problem 17 th and 18 th centuries (1600s- 1800s, even 1900s): moving toward popular sovereigntyKey problem 17 th and 18 th centuries (1600s- 1800s, even 1900s): moving toward popular sovereignty

11 What is the relationship between Popular Sovereignty and Capitalist Development? Great Britain Great Britain China China Contemporary U.S.Contemporary U.S. Contemporary ChinaContemporary China


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