Chapter 6 Economic Vocabulary

mercantilism

an economic philosophy commonly held in Europe from the sixteenth to the eighteenth centuries that advocated the accumulation of gold and silver as national wealth

capitalism

an economic system in which private individuals own most of the factors of production and make most economic decisions.

favorable balance of trade

the condition experienced when a nation sells more goods abroad than it purchases from foreign nations

classical liberal capitalism

the form of capitalism allowing the government only minimal ownership of resources and decision-making power

Laissez-faire

the idea that the government should generally leave the economy of a nation alone and allow the people to seek their own profit.

centralized socialism

a form of socialism in which the government is both the central owner and the decision maker in all economic affairs of the state

Communist Manifesto

Marx argued that any arrangement of the tools of production short of total state ownership would be counterproductive.

socialism

an economic system in which a central authority, committee, or the people in common generally own the factors of production and make economic decisions.

communism

in the economic sense, the most extreme form of socialism, in which all individuals voluntarily contribute their labor for the good of the society while taking from the economy only the goods and services that they truly need

radical capitalism

the most extreme form of capitalism in which private citizens own all factors of production and make all economic decisions

public goods

goods and services that benefit all or nearly all of a nation's people and that private firms or individuals would not choose to produce because they could not do so profitably.

state capitalism

a form of capitalism in which the vast majority of the factors of production are owned by private citizens but the government intervenes widely in economic decisions to ensure that egalitarian goals are carried out

welfare state

a nation under extreme state capitalism in which high taxes are used to provide wide social programs

social democracy

a transitional economic system bridging the gap between capitalism and socialism with the predominant characteristic of the state's taking possession of those industries that are the cornerstones of the economy

nationalization

the government's acquisition of the ownership of major industries.

privatization

the government's selling of nationalized businesses back to private owners