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Adam Smith
professor of economics at Scotland's university of Glasgow
Adam Smith's contribution to society
his work (the wealth of nations) became the basis for capitalism
Law of Supply and Demand
supply and demand worked together to set prices
How did the law of supply and demand work
Demand increases so price increases, and opposite (if a product is rare or hard to get then price increases)
Example of Supply and Demand
ebay
Idea behind Law of Supply and Demand
competition to create products then better quality and lower priced products will be created
According to Smith what happens when there was no competition
no competition = no focus on creating a quality product
Law of Self-Interest (profit motive)
people act in their own financial best interest
Connection between Law of self interest and competition
self interest causes people to build their own business, which creates competition
Means of production
business, agriculture, transportation, communication
laissez-faire capitalism
government shouldn't interfere with the economy
Why is capitalism known as a free market economy
because private citizens own the means of production and people compete for profits because no one restricts
Advantages to capitalism
large number of products, big variety of prices, focus on customer needs
disadvantages to capitalism
creates greed, selfishness, abuse which later led to labor abuse
Karl Marx
german co-author of communist manifesto
Marxism
philosophy basis of communism
According to Marx how was society divided
Haves - owners/rich off of other people
Have nots - workers who did labor/received little
Marx's predictions
world wide revolution where the bourgeoisie would be overthrown
Marx's envision for ownership
no private property, no private ownership
Marx's envision for alaries
based on needs
What problem would be solved because of Marx's economic ideas
crime and conflict
Marx's political vision
government would be run by the people, needs of proletariat, not business
Philsophical problems within Marxism
ignores human needs for incentive
