Classical Liberalism and Capitalism

Human Needs and Wants
- Humans possess unlimited needs and wants.
- The earth has a limited amount of resources leading to the concept of scarcity.
Scarcity
- Scarcity refers to the mismatch between human desires and the limited resources available.
- This limitation prompts essential questions on resource allocation:
- What to produce?
- How to produce it?
- Who gets it? (How to distribute it)

There are three fundamental economic systems in place:

Market Economy - An economy where prices and production are determined by supply and demand with little government interference
- Also known as capitalism, free market, or private enterprise.
Planned Economy - An economy where the government controls what is produced, how much, and at what price.
- Also referred to as socialism, communism, centrally planned, or public enterprise.
Mixed Economy - An economy that combines elements of both market and planned economies, with both private businesses and government regulation.
- Can range from welfare capitalism to highly socialistic economies

Economic Theories and Principles
- Strength of nations is based on goods produced, rather than accumulation of gold.
- Laws that inhibit economic growth are disadvantageous.
- Invisible Hand: Individuals pursuing self-interest would inadvertently contribute to societal welfare without the need for centralized economic planning.
- Laissez-Faire: Governmental roles should be limited to protecting against foreign threats, maintaining order, and securing individual property rights.

Three Basic Economic Questions
- What goods/services to produce?
- Determined by consumer demand.
- How to produce the goods/services?
- Influenced by competition among suppliers regarding quality and price.
- Who should goods/services be distributed to?
- Distributed to consumers who can afford them, reliant on price systems.

Thomas Malthus
- Proposed that the world’s population is growing faster than its capacity to produce food.
- Historical checks on population growth included famine and disease.
- Government intervention through charity could destabilize the system.
David Ricardo
- Expanded on Malthus’ ideas, stating poverty is unavoidable.
- Introduced the Iron Law of Wages: As wages increase, families grow larger leading to an excess supply of workers, ultimately lowering wages.
- Argued that poverty is a natural systemic issue that should not be disrupted by government intervention.
Social Darwinism
- Based on notions of Darwin's theory of "survival of the fittest," it was not promoted by Darwin himself.
- competition naturally rewards the most successful individuals or businesses and leaves the less successful behind
- Competition is viewed as a means of ensuring societal benefit through the survival of the fittest.

Historical Contexts
- Rise of the middle class and nouveau riche during the Industrial Revolution.
- Rapid global industrialization with comparisons of success between US and high-socialism countries (e.g., North Korea).
- Current technological advances stimulated by competitive markets.

Problems Arising from Capitalism
- Lack of worker protection evident from industrial settings, such as in Great Britain’s factories, US slavery practices, and Asian sweatshops.
- Historical economic failures (e.g., The Great Depression, 1990s dot-com bubble, 2008 global recession) reflect the shortcomings of capitalist structures.
- Acknowledgment that competition does not guarantee equal opportunities for all business entities (e.g., Walmart's market dominance).
- Capitalism’s contribution to global climate change due to escalating consumerism.