Capitalist Revolution and Inequality - Week 1

ECON113

capitalism

an economic system that is based on a combination of institutions built around private property, markets, and firms

economics

study of how people interact with each other and with the environment for their livelihoods

capitalist revolution

• advances in technology increased amount that could be produced in a day’s work

  • increase in production as well as threats to natural environments; inequalities

GDP stands for

Gross Domestic Product

gross domestic product is used to what

measure the size of the economy

gdp is? (multiple)

• the market value of all goods produced in a country

  • gdp is the total income earned within a country

gdp per capita

income per person, measures average income

how to calculate GDP per capita

GDP / country’s population

disposable income

measures amount of money one can spend before going into debt

how do you calculate disposable income?

wages + profit + rent + interest + transfers - taxes

is disposable income alone enough to measure a group’s wellbeing?

no, doesn’t account for income inequality and relative income positions within the group

hockey stick represents?

economic growth represented by a linear scale

ratio scale

GDP per capita moving up the vertical axis

• used to compare growth rates → makes it easier

growth rate

change in income / original level of income

technological advances happened when and where?

britain in the middle of the 18th century

technological advances include?

textiles, energy, transportation (steam engine)

industrial revolution is?

the biggest leap in technological progress in modern history

technological progress

less labour is needed to produce same output

technology is a process that

uses a set of inputs, including materials, machinery and labour to produce an output

hockey stick present in graphs that represent:

• gross domestic product per capita

• production of labour

• connectivity of the various parts of the world (speed at which news travels)

• impact of the economy on the global environment (CO2 emissions and climate change)

economic system

a way of organizing the production and distribution of goods and services in an entire economy

institutions

different sets of laws and social norms that regulate production and distribution in families, private businesses, and government bodies

even so, capitalist economies rely on non-capitalistic institutions such as:

families, government

other forms of transferring goods besides markets

theft, gifting, government orders

factors of markets

• they are reciprocated → private property is exchanged between buyer and seller

• voluntary

• competition

in a capitalist system

• production takes place in firms

• inputs and outputs are private property

• firms sell outputs on markets

• capital goods are privately owned

• power is concentrated by hands of owners and managers, but is limited by competition with other firms