GMGT 1010 Canadian Capitalism: Class 2, 3 and 4 Review

Flashcards covering key definitions, features, assumptions, pros, and cons of capitalism as discussed in the GMGT 1010 lecture notes.

What is capitalism?

An economic system that allows for private ownership of the means of production (land, labour, capital) and assumes that economic decision making is in the hands of individuals or enterprises who make decisions expecting it to earn a profit.

What are the three central features of capitalism?

Private ownership of the means of production, Wage Labour, and Production for exchange and profit.

What is the definition of private property in the context of capitalism?

The legal right to own and use economic goods (means of production) such as land and buildings.

What are some ethical implications related to private property in capitalism?

Uneven distribution of wealth, use of taxation to redistribute wealth, and intellectual property.

What is individualism as a key assumption of capitalism?

The idea that the individual, and not society or a collective, is the paramount decision maker in society, and that the individual is inherently decent and rational.

What does economic freedom entail as an assumption of capitalism?

Few restrictions on business activity, including freedom to voluntarily enter business, enter contracts, and locate anywhere.

According to the notes, how is economic freedom measured?

Through property rights, taxation, government intervention, regulation, international exchange, foreign investment, money and inflation, wage and price controls, and corruption.

What is the assumption of equality of opportunity in capitalism?

All individuals or groups have an even chance at responding to some condition in society.

What is competition in the context of capitalism?

Many rival sellers seek to provide goods and services to many buyers.

What are some ethical implications of competition in capitalism?

The potential for oligopolies or monopolies, difficulty for some firms to enter certain industries, and corporations engaging in anti-competitive activity.

What is profit, and what is its role as an assumption of capitalism?

Profit is the excess of revenues over expenses, driven by the 'profit motive' and profit maximization, serving as a regulator of efficiency and a measure of effectiveness.

What are some ethical implications of profit in capitalism?

Profits sometimes being viewed with disdain or as immoral, and issues around taxation of excessive profits, inflation rates, and profit redistribution.

What is the work ethic as an assumption of capitalism?

A code of values claiming that work is desirable, a natural activity, worthy, admirable, and both personally and socially valuable, historically reinforced by the Protestant ethic.

What is consumer sovereignty in capitalism?

The assumption that consumers have and exercise power over producers through their purchasing decisions of goods and services.

What are some ethical implications or challenges to consumer sovereignty?

Consumers are not always aware of alternative products, their preferences are shaped by advertising, and producers can sometimes ignore consumer wishes.

What is the assumed ideal role of government in a perfectly capitalist market?

Minimal involvement, often referred to as a laissez-faire approach, primarily limited to enforcing contracts.

What are some of the identified 'Pros' of capitalism?

Choice, Efficiency, Quality, Innovation, Wealth Creation, Adaptability, and Economic Growth.

What are some of the identified 'Cons' of capitalism?

Wealth Inequality, Short-term Focus, Market Imperfections, Exploitation of Labour, Externalities, Economic Instability, and problems with Public Goods.