Capitalism Notes - Mr. Manos

Laissez-faire
Opposed to Gov’t Intervention IF it interferes with competition & selfinterest
Smith: Growth of the market system causes nation’s wealth to increase
How could the system grow?
How do you enlarge sales before advertising as we know it?
Smith:
1. Improve productivity: increase the output of the work force
2. Improve the division of labor
How do we enhance the division of labor?
1. Organization is key
2. Machinery
3. The market system becomes an immense force for the accumulation
of capital, mainly in the form of machinery and equipment
4. But additional workers cause wages to rise
5. Wouldn’t profits be squeezed
6. Cost of labor would dry up funds for machinery
7. Increase in demand for labor = increase in supply
8. Wages only rise moderately
Attributes of the Economic System:
1. Society of competitive, profit seeking individuals can assure its
orderly material provisioning through the self-regulating market
mechanism
2. Such a society tends to accumulate capital and in doing so, enhances
its productivity and wealth
Market System assures both short term viability of self-regulating (pots &
pans) as well as long term viability of self-regulating its steady growth.
Market System not without problems, as we will see.
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