Netter Capitalism Test 1

What is the classical Greek and Christian belief on commerce?

- Discouraged commerce and the pursuit of gain when it comes to the good of society

- Greeks saw it as a necessity but feared its effects on the common good

- Civic Tradition

Pleonexia

A Greek term meaning "the desire to have more," pleonexia refers to the yearning after money and power.

Aristotle on Usury

- Aristotle condemned it as unnatural

- Held the belief that it went against the polity (The people as a whole who had a shared purpose)

Thomas Aquinas on private property

- The existence of private property keeps with Natural Law because everyone is more concerned to take more care of something that belongs to him.

- Secondly, human affairs are more efficiently organized if the proper care of each thing is an individual responsibility.

Protestants on commerce

Aquinas

- Saw the positives of commerce by supplying things to those from distant places

- Distinguished the negatives of fraud and dishonesty from the role of merchants

- Pursuit of riches still threatened salvation

Jewish Usury and the monarch =

- Jewish financiers soaked up money from the untaxable large estates that could then be taxed and taken to the monarch

Catholic countries and Usury

- Usury was illegal in canon and civil law well into the 18th century

- In the 19th century the Vatican told people not to worry about lending money at the legal rate

Machievelli

- Emphasized self-sacrifice for the greater good, a big belief in the time of war

What is Republican "Liberty"?

- The freedom to take part in preserving the freedom of the commonwealth from foreign invasion

Why was ownership of land a prerequisite for citizenship?

- It freed up men from the need to engage in productive activity and allowed them to devote themselves to commonwealth

Sparta and its polity

- Everyone was dedicated to the defense of the City-state

Civic Tradition

- Christian

- Emphasis on the devotion of citizens to political institutions

- Provided arsenal that was repeatedly used AGAINST commerce

- Virtue was a personal devotion to the republic through participation in political life and willingness to fight on its behalf

Civil jurisdiction

- Roman Civil law

- Rather than valuing the liberty to participate in government, it valued freedom from government as ensured by law

- Freedom of property and the rule of law were the hallmarks of this tradition

- Latent individualism

Thomas Hobbes

- Argued against religious wars: "Salvation wasn't based on the things that distinguished different Christian beliefs"

- Argued that focusing on worldly well-being would provide a good ground for peace

- Individualism matters... We need to protect individuals from groups

Natural Jurisprudence

- There are several ways of living, some better than others, and everyone gets to choose what they want to pursue

- Hobbes: removal of fear of the after life and focusing more in the here and now would provide more peace

"For the discovery of truths, it is necessary to argue against all things and for all things"

Aristotle

"The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function."

F. Scott Fitzgerald

"There are no solutions, only trade offs"

Thomas Sowell

Ideology

Coherent system of ideas on how system works, how people should operate

- One of the forces influencing society

What are the 5 forces influencing society

1. Technology

2. Economic institutions

3. Social institutions

4. Ideology

5. Physical environment

"The past resembles the future more than one drop of water resembles another."

Ibn Khldoun

How does failure fit into capitalism?

- "Capitalism without failure is like Christianity without hell"

- Failure and starting again is part of capitalism

Government Coercion

- Force people to contribute to providing the public good

- Not necessarily bad but a lot of dispute on how much

What is Finance?

- Exchange of purchasing power over time

"The experience of nations with well-being is exceedingly brief. Nearly all, throughout history, have been very poor"

John Kenneth Galbraith

"In a misery of this sort... nine parts in ten of the whole of Mankind drudge through life"

Edmund Burke

Nirvana Fallacy

- The logical error of comparing the actual situation with its idealized counterpart rather than the actual alternative

- Can also refer to the tendency to assume that there is no perfect solution to a problem

- Easier to criticize than provide a different plan

- Alternatives have issues too

Views of Aristotle

1. Civic virtue reflect devotion to republic, but citizens had to be economically independent

2. Sus of those who made money from trade (pleonexia)

3. Believed in private property but used for civic purposes

4. Scientific method to get knowledge

5. Believed in establishing and verifying fact, logic, and changing belief

6. Happiness is an internal state of mind from living the best way possible by continuing to be the best you possible

7. Virtue only applied to citizens

Rome

- An empire rather than a city-state, so commerce was much more important

- Land was owned by the state from conquest but the tenants had significant control

- Developed the use of contracts to make trade work

Metaphysical

- Concerned with abstract thought. We know things because we do, don't need to experience them

- Opposite of Aristotle

Republic is a form of government where the power

1. Rests with the people

2. Is exercised through representative government

3. Has an elected head of state

Justinian Code

Roman

- Goal of defining what belongs to the individual, not the goal of polity

Thomas Aquinas

- Natural theology and reason is found in God

- Natural wealth: saw as a remedy for natural wants (limited and good)

- Artificial wealth: invented by man for convenience of exchange (unlimited and harmful)

- Natural wealth still isn't the goal, just a means to an end

Aquinas and just price

- Seller should receive roughly what the object exchanged was worth in terms of actual costs

- Do not sell for more than what something is worth

- If a money lender could go without money for a year, why charge interest?

- Wealth gains by one party is a loss for another party

St. Francis of Assisi

- Founded Franciscan order of monks

- People are the stewards of nature: stay in the holy land in Egypt

- Celebrated and venerated poverty, claimed to be married to poverty

Pope Francis

- Can no longer trust unseen forces such as the invisible hand, action is required to stop inequality in the market

- "not news when a homeless person dies but it is when a stock goes down"

- Not against capitalism, but for "social economy of the market" which includes regulatory authority like the state that mediates

Concept of counterfactual

Hypothetical scenario that imagines what would have happened if a past event or condition were different, often used to analyze cause and effect.

What did the fall of Rome do to commerce and trade?

Commerce and trade decreased and trade in a larger sense had basically disappeared in Europe

What is the Manorial System

- Self-sufficient, economic structure

- Characterized by the relationship between Lords and peasants who needed workers and protection

- The estate was controlled by the Lord and enjoyed the land rights and right to control peasants through serfdom

- Led to Feudalism

What is Feudalism

- Social system in which landowners granted land in return for military service or labor

- Strongly connected with the manorial system

Explain how trade took place in a manorial system

- Profit motive was nonexistent, churches set the "just price" for inputs and labor (no profit or return on capital)

- Trade across communities was almost nonexistent because roads were few and dangerous

- Usury was not allowed except small scale by Jews

England and early economic regulatory history

- More than any other country, England had national regulation of trade, rather than local like other countries

- Edward I evicted foreign companies and established English wool trade

- Edward III put in wage and price controls during war with France, and made men work at those wages

- Strict restrictions on markets and movement of goods. Workers could not move. Punishments given by feudal lords and church

Statute of Artificers

- Doing at a national level, through English parliament, what guilds had previously done at local level.

- Fix prices, impose minimum wages, restrict workers freedom of movement, and regulate training

- Showed that England's government was prepared to start limiting power of guilds in order to better promote commerce in an age ripe for trade.

Hundred years war and its impact

- Created of new roads which increased trade and commerce

- Led to devastation in France

- Bankrupts countries but led to National Identity of France and England

Wars of the Roses and its impact

- Internal to England. Between two sides of the same family (Yorks vs Lancasters)

- Over money and power (claim to the throne), ends with marriage and start of Tudor dynasty

- Bloodiest times in England but not widespread

- The aftermath saw a lot of chaos and the RISE OF THE MERCHANT CLASS

English Civil War and its impact

- Three-phase war between the Parliamentarians (roundheads headed by Cromwell) and Royalists (Cavaliers for Charles I)

- Charles I dismissed parliament for 11 years, made peace with France and Spain, and promoted the High Anglican Church

- Parliamentarian victory at the Battle of Worcester

- More power to parliament and Oliver Cromwell takes over (no monarchy)

Glorious Revolution and its impact

- Cromwell died and the monarch was reestablished

- William and Mary (protestants) came to take over her rumored catholic brother (James II) in law, war over power and religion

- Ends with an English Bill or rights to address abuses of government under James II and protect protestants

- More power to the people and power came from the people. This limited the power of the king

What is the historical order of the 4 English wars studied in class?

1. 100 years war

2. Wars of the Roses

3. English Civil War

4. Glorious Revolution

Who was Joan of Arc and how is she relevant to the class?

- French heroine of the Hundred Years' War who unified the French people and led them to victory

- Helped create identity for France

Who was considered one of the greatest English monarchs?

Elizabeth I

Daughter of Anne Boleyn

What were the reasons for the English Civil War?

1. Power

- Divine right of kings vs power of parliament

2. Money

- Taxes, Charles spending on wars and expensive taste

3. Religion

- Charles marries a Catholic, fear among Puritans of return to Catholicism, promoted Anglican Church

English civil war aftermath

1. Charles I and other royalists executed

2. Charles II was exiled

3. Monarch replaced with Commonwealth of England then the Protectorate under Oliver Cromwell's rule

Dutch East India Company

- Dutch Republic provided an example of highly commercial society and increasing national power

- Became the most important commercial enterprise in the world by transporting luxury goods from India and Indonesia to Europe

- Caused the Dutch to become the first financially developed country led by the banks and stock companies

- Commerce became key to politics

After the Industrial revolution, capitalism was OR was not pervasive?

It was not

State-owned enterprises

- Government owned or government-controlled economic entities that generate bulk of their revenues from selling goods and services

- Dominated the commanding heights of the economy

How did wealth and poverty start to change in the 1800's

- Distinction between deserving and undeserving poor

- State gradually takes over taking care of the poor (mainly deserving poor)

- Protestant work ethic began to equate wealth with virtue (supporting the poor leads to more poor)

What is the basic idea of mercantilism?

- The wealth of a nation depends on the possession of wealth

- International wealth is fixed. All trade is a zero-sum game and gains for one nation could only come at expense of others

- Limiting imports through tariffs and maximizing exports, a country would be wealthier

What were the results of mercantilism?

- War and protectionism: exploitation of poorer countries and colonies as suppliers of raw materials. Wealth was based on seizure and exploitation

- European nations developed protectionist policies to keep Dutch from controlling trade

- Dutch didn't adopt mercantilism and became weaker for it

- KEY POINT: State takes over economy and replaces the Christian paternalistic ethic that condemned acquisitive behavior

- England became dominant power because of high tariffs and payments from merchants

Bullionism

- Nation's policy of accumulating as much precious metal as possible while preventing its outward flow to other countries

- Seen especially in Spain

- Penalty for exporting could be death

- Led to inflation in Europe

- Different from Mercantilism

Was Aristotle communist?

- No, he was outspokenly anti-communist

- Plato was communist

Aristotle on private property

- "It is clearly better that property should be private, but the use of it common; and the special business of the legislator is to create in men this benevolent disposition."

- When it's private people tend to take more care of it was his argument

"The worst form of inequality is to try to make unequal things equal."

Aristotle

"All paid jobs absorb and degrade the mind."

Aristotle