Conservapedia - User contributions [en]

Socialism

2009-09-22T16:35:19Z

RoyP: included other historically used names for "state enemies", including those used by the Soviets against conservatives.

[[Image:Backrdv12n2.jpg|right|400px|thumb|The [[caption]] reads, "Long live the great undefeatable flag of Marx, Engels, Lenin, Stalin!" This is Leninism]]
'''Socialism''' is an economic system of government which advocates state ownership of the means of production with equal distribution of goods among the people. The central goal is to establish a "worker's paradise"-an ideal state with perfect equality.

In practice the government owns the banks, railroads, farmlands, factories, and stores, and is the only employer. (People sometimes are allowed to have small gardens.) The central goal is to destroy the "evils of capitalism" by government ownership of the means of production.

In practice however the socialist system never manages to establish this "paradise" because management for the benefit of the employees leads to featherbedding and lack of investment or economic growth, at the expense of consumers. Collective farming (operating farms like factories) sharply reduced the food supply. The most thoroughgoing efforts by Communist regimes turned into authoritarian dictatorships. The government controls all investments, production, distribution, income, and prices, as well as all organizations, schools, news media and formerly private societies. Churches and labor unions are suppressed or controlled by the government. Socialism is the antithesis of [[capitalism]], opposes private ownership of capital or land, and rejects the free market in favor of central planning. It also rejects "civil society" and makes sure that all organizations are controlled by the government.

Theoretically socialist regimes can have multiple parties. In practice there is only one political party, and it controls the government. The leaders of the party choose the government officials and set all policies for the nation and for cities and localities. Opposition parties are allowed negligible access to the media or to meeting halls or to funding, and their leaders are often arrested as "enemies of the people", "counter-revolutionaries", or "reactionaries" (especially in the case of conservatives).

As a political ideology based on the redistribution of wealth, socialism stresses the privileges of the many over the rights of the few, but in practice when socialist economic principles are forced onto a nation by a totalitarian government a new Upper Class appears which is much better off than the Lower Class.

{{cquote|'''<big>Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy. Its inherent virtue is the equal sharing of misery.</big> - Winston Churchill''' <ref>[http://www.quotesdaddy.com/quote/280995/winston-churchill/socialism-is-a-philosophy-of-failure-the-creed-of Churchill; Quotesdaddy.com]</ref>}}

There are three main kinds of Socialism, but all of them are built on the premise that social control of the means of production ensures that a community's resources are used in a positive and uplifting manner.

==Leninism==
First there is Marxian Socialism or '''Leninism''' as revised by Lenin and practiced in the Soviet Union by [[Stalin]] (and his successors) and in China by [[Mao Zedong]] (but not by his successors), as well as Cuba, North Korea and Vietnam. The first version is totalitarian, with no democracy and all decision made by the leaders of the Communist party. Virtually all property (apart from clothes and some personal possessions) is controlled by the Party, as are all jobs and all economic activity. Conservatives have been very hostile. China after Mao's death remained politically totalitarian under the Communist party, but allows a vibrant capitalism and free enterprise system.

Socialism in Communist countries such as the old [[Soviet Union]], [[China]] in the 1949-1980 period, [[Cuba]], [[North Korea]] and [[Vietnam]] had government ownership practically everything. That led to severe inefficiency and widespread shortages of basic goods and services. These Communist countries used an "[[Iron Curtain]]" to keep their citizens from emigrating and an elaborate, brutal secret police to ensure there was no freedom of ideas or action.

==Democratic Socialism==
The second form (sometimes called "Revisionism") prevailed in Western Europe down to the 1970s, and is typified by the British Labour Party. It was democratic and closely linked to labor unions that had real power. The goal was for the government to own ("nationalize") major industries such as coal mining, railways, steel making, shipbuilding, airlines, and banking. Small businesses remained private. The idea was that labor unions controlled the government and therefore unions controlled working conditions and wages for the benefit of workers, regardless of the damage to long-term economic growth.

The Socialists were well organized and after 1918 they bitterly fought the breakaway faction that became the [[Communist]] movement. In recent years major Socialist parties (in Europe and Canada) have largely dropped the long-standing demands for state ownership of the means of production and have mostly accepted capitalism. However they remain tied to labor unions and favor liberal policies regarding high taxes and public spending. Conservatives have been negative toward the economics of the second form of socialism, but they have praised its vigorous anti-Communism. Conservatives complain socialists use government power to redistribute wealth.

In countries such as [[Sweden]], a form of democratic socialism has been much more successful, leading to high social equity and a burgeoning economy, as well as general content. Although this acts as a drag on the economy, in democratic countries of the industrialized west, some socialist ideas have been put into practice with varying degrees of success.

==Communal Socialism==
The third form of Socialism has nothing to do with Marx or government ownership, and emphasizes the importance of the community over the individual. Usually it means small communities sharing most of their possessions. The most famous examples are the religious [[Shakers]] of the 19th century (a conservative group), and the new-left communes that briefly existed in the 1960s and 70s.

==Controversy==
The ideology of '''Socialism''' is subject to a variety of interpretations. From a conservative perspective, Marxist socialism is an economic system whereby the means of production are seized and monopolized by the government sometimes without compensation to the builders of the [[capital]]. Investments, production, distribution, income, prices, and economic justice are administered by a government [[nomenklatura]] that regulates the transfer of money, goods (including capital goods), and services primarily through taxation, regulation and aggressive institutionalized coercion.

However, some socialists reject this description. Democratic socialists advocate a system of governance based on the principles of [[solidarity]], [[equality]] and [[liberty]], viewing these principles as interconnected. They believe increased socio-economic equality is associated with increased practical freedom to fulfill human potential. In many countries, such as Britain, socialist movements have been built on Christian, democratic and co-operative bases, embracing the notion that individuals should 'treat others as they would wish to be treated', and arguing that all individuals have a moral responsibility for the welfare of other members of their society. Socialism seeks to prioritize human welfare over other goals, such as profit and wealth accumulation by elites; it views increased redistribution of wealth as vital to securing greater freedom and happiness for the bulk of the people. Though this rosy picture of socialism is appealing to many, it ignores what Hayek called "the road to serfdom." Though in theory socialism is an idealized, egalitarian form of economics, in practice it means rule by labor bosses who minimize individualism and economic growth in the name of equality and benefits for the working class.

==Key elements==

As a political ideology based on the expropriation of wealth, socialism stresses the privileges of the nomenklatura over the rights of workers and earners. Many of the most notoriously oppressive dictatorships have been socialist, such as the [[Soviet Union]] and China under Mao Zedong. Private wealth was seized and the owners executed.
===Welfare state===
As an economic theory, democratic socialism calls for equalization of incomes, through taxation of private wealth coupled with welfare state spending. The [[nationalization]] of major industries is primarily a device to allow the unionized workers to control their own wages and working conditions, cutting out the capitalistic owners.

State [[pension]]s and unemployment insurance were not brought in by Socialists--they were first introduced by arch-conservative Chancellor [[Bismark]] in Germany in the 1870s. In Britain they were introduced about 1910 by [[Winston Churchill]] and [[David Lloyd George]] of the [[Liberal Party]], and in the U.S. were part of Democratic President, Franklin D. Roosevelt's,[[New Deal]] in the 1930s. Welfare state ideas such as [[universal health care]], and state control of key industries have been common throughout the developed world in the modern era. However, the United States has always rejected socialism as an ideological position, with a few exceptions such as the [[TVA]].

===Religion===
Some forms of socialism have often been [[atheistic]] in character, and many leading socialists (most prominently Karl Marx) have been critical of the role of religion - and conservative religion in particular - which they criticize for lending support to an unjust social order. Other Socialists have been Christians, and there has been considerable interplay between Christian and Socialist ideas. [[Christian socialists]] have asserted that early Christian communities, in particular, displayed certain traits, such as the holding of possessions in common,<ref>Acts 2:44: "Everyone was filled with awe, and many wonders and miraculous signs were done by the apostles. All the believers were together and had everything in common. Selling their possessions and goods, they gave to anyone as he had need."</ref> the rejection of conventional sexual mores and gender roles, the provision for communal education, etc., that could be considered similar to socialism. See, for instance, Arnold Toynbee, the British historian, has responded to this,
:"the Marxian excerpt from a Christian Socialism is an experiment which is doomed to failure because it has denied itself the aid of the spiritual power which alone is capable of making Socialism a success. ….'Christianity', they say, 'is the opiate of the People'; and, in the [[Soviet Union]]… Christianity or of any other theistic religion have been debarred… from admission to membership of the All-Union Communist Party. In fact, Communism has been definitely and militantly anti-Christian. Thus the campaign against Christianity which is to-day an integral part of the propaganda of [[Marxian Socialism]] is a challenge to the living generation of Christians …we latter-day Christians may still turn a Marxian attack upon Christianity to good account … a re-awakening of the Christian social conscience has been the one great positive practical achievement of Karl Marx" <ref>Arnold Toynbee, ''A Study of History'', Annex II to Vol. V, Part C (i) (c) 2, p. 585-586, Marxism, Socialism, and Christianity.</ref>

Communist persecution notwithstanding, the earliest Christians were decidedly living in a manner consistent with the aims of socialism. Acts 4:32-5:11 not only describes community redistribution of property, but describes punishment of a husband and wife for failing to completely share the proceeds from selling their land.

[[Marx, Karl|Karl Marx]] considered socialism to be a transitory stage between capitalism and communism. In his view, socialism is summed up by the expression: "From each according to his ability, to each according to his needs." A major criticism of socialism is that it infringes individual rights in favor of the populace. In a very real sense, politics in the western world throughout the 20th century was shaped by the conflict between socialist and capitalist governmental policies.

Although socialist parties are common in Europe, the leading examples all currently embrace some free enterprise, individual property rights and certain other aspects of capitalism although leading European Socialists are very critical of America. In many European countries socialism has been changing to [[Social democracy]].

== Britain, the Labor Party and Socialism ==

At its inception, the [[Labour Party]] borrowed socialist ideas by committing itself to a program of nationalization under 'Clause 4' of their Constitution, but was always fundamentally committed to the British State and the [[Westminster model]] of parliamentary government. Clause 4 was formally dropped after the election of [[Tony Blair]] as Party leader, signaling the creation of 'New' Labour.<ref>http://news.bbc.co.uk/onthisday/hi/dates/stories/july/21/newsid_2515000/2515825.stm</ref> The British governments of 1945-1950 and 1950-1951 under [[Clement Attlee]] implemented the nationalization of several industries and utilities, including coal, steel, water, railways and electricity. Former owners of nationalized industries were compensated. The best known example is the [[nationalization of health care]] to create the [[National Health Service]] (NHS). This made - literally overnight - health care "free" at the point of delivery for everybody in Britain.

Since the election to government of the Labour Party in 1997, many "[[progressive]]" measures have been introduced, such as the Minimum Wage, Child Tax Credits, union recognition legislation, increased maternity and paternity leave, the Child Trust Fund, refurbishment of [[council housing]], free bus travel for the elderly, increased paid leave for all workers, free nursery-school places, and large cuts in unemployment.<ref>[http://www.towerhamlets.labour.co.uk/a1c1ce9b-1488-7bb4-a528-14436f084ba3]</ref> In addition, over a million children and a million pensioners have been [[lifted out of poverty]]; however, many in the [[Labour Movement]] are extremely critical of [[New Labour]]'s tentative approach to reducing [[inequality]], and are frustrated that the government has not been more willing to make the case to the public for the [[redistribution of wealth]].

== Criticism of socialism ==

[[Friedrich Hayek]] and [[Ludwig von Mises]] were important critics of socialism, particularly regarding what is known as the Socialist Calculation Debate. Hayek and Mises argued that a socialist economy would face information constraints that would prevent even well intentioned planners from efficiently allocating resources. That is, the planners would not know how much a battleship or a hospital cost, and could not efficiently allocate resources among different choices. This criticism should be considered as compatible with, but independent of, criticisms based on [[Public choice theory]] that bring into consideration the incentives of political actors.

==Past Socialist Countries==
===Chile===
Marxist socialist leader [[Salvador Allende]] was popularly elected in Chile in 1970 in a minority government run by the Popular Unity Party. Allende's economic policy, known as the Vuskovic Plan, sought to achieve transition to socialism. The Vuskovic Plan involved nationalization of large foreign enterprises, land redistribution to farmers, and redistribution of income. The majority in Parliament never supported it and the plan was never carried out as Allende was overthrown by the military.

==Other Socialist Countries (Current )==
===[[Cuba]]===
Communist leader [[Fidel Castro]] violently overthrew the Cuban government in the 1950's and has declared Cuba to be Communist since then. Today, Cuba faces copious economic problems and the people lack their Fundamental Rights. ([[Raul Castro]] now runs the country, having taken it over from his ailing brother Fidel.)

===North Korea===

North Korea's form of communism is in the form of "Juche" - a doctrine established by Kim Il Sung and carried on by current leader Kim Jong Il. Although it is investing heavily in nuclear weapons and long-range missiles, extreme poverty on the verge of starvation is the fate of the people, who are very tightly controlled. The country has little to no electrical power at night outside the capital, which can be verified by looking at nighttime satellite photos. <ref>http://epod.usra.edu/archive/epodviewer.php3?oid=87488</ref>

===Venezuela===

The socialist policies of president-for-life Hugo Chavez have destroyed the economy of that oil-rich nation. In 2009, he seized the Venezuelan operations of U.S. based Cargill in order to tighten his grip on the shrinking food supply in his country. <ref>http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/4938993/Venezuelas-Hugo-Chavez-tightens-state-control-of-food-amid-rocketing-inflation-and-food-shortages.html</ref>

==Different Strands of Socialism==
*[[Communism]]
*[[Social democracy]]
*[[National socialism]] (Nazism)
*[[Fascism]]
*[[Welfare state]]

==Bibliography==
* Busky, Donald F. ''Communism in History and Theory: From Utopian Socialism to the Fall of the Soviet Union'' (2002) [http://www.amazon.com/Communism-History-Theory-Utopian-Socialism/dp/027597748X/ref=sr_1_24?ie=UTF8&s=books&qid=1232396722&sr=1-24 excerpt and text search]
* Dougherty, Jude P. "Socialist Man: A Psychological Profile," ''Modern Age'' Volume 46, Number 1-2; Winter/Spring 2004 [http://www.mmisi.org/ma/46_1-2/dougherty.pdf online edition], a conservative critique
*Laslett, John, ed. ''Failure of a Dream: Essays in the History of American Socialism'' (1984)
* Lindemann, Albert S. ''A History of European Socialism'' (1984)
* Lipset, Seymour Martin, and Gary Marks. ''It Didn't Happen Here: Why Socialism Failed in the United States'' (2001), Lipset was a leading conservative scholar [http://www.amazon.com/Didnt-Happen-Here-Socialism-Failed/dp/0393322548/ref=sr_1_21?ie=UTF8&s=books&qid=1232396722&sr=1-21 excerpt and text search]
* Malia, Martin. ''Soviet Tragedy: A History of Socialism in Russia'' (1995) [http://www.amazon.com/Soviet-Tragedy-History-Socialism-Russia/dp/0684823136/ref=sr_1_4?ie=UTF8&s=books&qid=1228761853&sr=1-4 excerpt and text search]
* Muravchik, Joshua. ''Heaven on Earth: The Rise and Fall of Socialism'' (2003) by conservative historian [http://www.amazon.com/Heaven-Earth-Rise-Fall-Socialism/dp/1893554783/ref=sr_1_21?ie=UTF8&s=books&qid=1228761601&sr=1-21 excerpt and text search]
* Novak, Michael. ''Capitalism and Socialism: A Theological Inquiry '' (1988) [http://www.amazon.com/Capitalism-Socialism-Theological-Michael-Novak/dp/0844721549/ref=sr_1_19?ie=UTF8&s=books&qid=1228761601&sr=1-19 excerpt and text search], bu leading conservative scholar
* Nove, Alec. ''An Economic History of the USSR 1917-1991'' (3rd ed. 1993)
* Pipes, Richard. ''Communism: A History'' (2003), by a leading conservative
* Suny, Ronald Grigor. ''The Soviet Experiment: Russia, the USSR, and the Successor States.'' (1998) [http://www.questia.com/PM.qst?a=o&d=24265044# online edition]

==References==
{{reflist}}

==External links==
*[http://www.mises.org/etexts/hayekintellectuals.pdf The Intellectuals and Socialism], By F.A. Hayek, ''The University of Chicago Law Review'', (Spring 1949), pp. 417-420, 421-423, 425-433.
*[http://www.britannica.com/eb/article-9109587/socialism Socialism] Encyclopædia Britannica.
*[http://www.aim.org/wls/category/socialism/ What Liberals Say - Category: Socialism], [[Accuracy In Media]]
*[http://en.wikipedia.org/wiki/China]
*[http://en.wikipedia.org/wiki/Socialist_countries]

[[Category:Socialism]]

Capitalism

2009-09-22T16:32:27Z

RoyP:

[[Image:Tokyo Stock Exchange.jpg|thumb|Tokyo Stock Exchange]]
'''Capitalism''', also called a '''free market economy''' is an economic system where the investment of capital, and production, distribution, income, and prices are determined not by government (as in [[socialism]]) but through the operation of a competitive market where decisions regarding transfer of money, goods (including capital goods), and services are voluntary and private rather than regulated and mandated by government (see [[law of supply and demand]]).

==Overview==
One self-regulating feature of capitalism is competition, which helps maintain fair market value for goods and services. However, ''unrestrained'' or ''pure'' capitalism may sometimes create a positive feedback loop in which a small number of individual accumulations of capital grow ever larger, eventually becoming so few as to limit effective competition, thus ceasing to strictly be free-market capitalism. In this regard, pure capitalism is unstable. Modern political systems have developed regulation mechanisms in an attempt to render capitalism more stable, including anti-trust regulation, trade tariffs, etc.

Since the fall of [[communism]], and the advent of information technology, capitalism is becoming increasingly widespread.

[[Adam Smith]] described the operation of capital accumulation through the productive powers of labor as such,

{{Cquote|Whatever a person saves from his [[revenue]] he adds to his [[capital]], and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book II, Chapter 3, Paragraph 15,] ''Of the Accumulation of Capital, or of Productive and Unproductive Labour'', First Edition 1776.</ref>}}
[[Image:Eco Pillars.jpg|right|320px]]
Smith goes on to describe how the productive powers of labor employed by the owner of a capital allow laborers to reproduce with a profit the value of their maintenance, over and above their own consumption, which then allows for an additional set of hands to be employed. <ref>Adam Smith, ''Wealth of Nations'', Book II, Chapter 3, Paragraph 22.</ref> Smith observes labor is the original purchase price for all the wealth of the world,

{{Cquote|The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour, 2<ref>'Everything in the world is purchased by labour.'—Hume, 'Of Commerce,' in Political Discourses, 1752, p. 12</ref> as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book I, Chapter 5, Paragraph 2,] ''Of the Real and Nominal Price of Commodities'', First Edition 1776.</ref>}}

Real wealth consists not in money, but in the things money will exchange for,

{{Cquote|In order to put industry into motion, three things are requisite; materials to work upon, tools to work with, and the wages or recompense for the sake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth; not in the metal pieces, but in what can be got for them. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 2, Paragraph 37,] ''Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital '', First Edition 1776.</ref>}}

Since wealth does not consist in money, gold, or silver, and labor is the original purchase price, Smith explains how the capitalist system is then put into motion, complete with natural incentives, only Smith does not use the word "capital" here to describe what is needed. Smith explains how a "store of goods", or "stock sufficient to maintain" the original capitalist entrepreneur is necessary;

{{Cquote|When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.

But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 1, Paragraphs 1 & 2,] ''Of the Division of Stock '', First Edition 1776.</ref>}}

The [[division of labor]] is the necessary condition that gives rise to the productive powers of labor that allows for large scale economic growth. By "division of labor", Smith is referring to "specialization of labor", where each worker acquires specific knowledge to apply to a specific task.

{{Cquote|In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides everything for himself, it is not necessary that any stock should be accumulated or stored up beforehand in order to carry on the business of the society. Every man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.

But when the division of labour has once been thoroughly introduced, the produce of a man's own labour can supply but a very small part of his occasional wants. The far greater part of them are supplied by the produce of other men's labour, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own. But this purchase cannot be made till such time as the produce of his own labour has not only been completed, but sold. A stock of goods of different kinds, therefore, must be stored up somewhere sufficient to maintain him, and to supply him with the materials and tools of his work till such time, at least, as both these events can be brought about.

As the accumulation of stock must, in the nature of things, be previous to the division of labour, ...in order to give constant employment to an equal number of workmen, an equal stock of provisions, and a greater stock of materials and tools than what would have been necessary in a ruder state of things, must be accumulated beforehand. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Introduction, Paragraphs 1, 2, & 3] ''Of the Nature, Accumulation, and Employment of Stock,'', First Edition 1776.</ref>}}
{{Cquote|When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book I, Chapter 4, Paragraphs 1] ''Of the Origin and Use of Money'', First Edition 1776.</ref>}}
==Capitalism and Society==
[[Image:Ludwig von Mises.jpg|thumb|100px|Ludwig von Mises]]
Historically, capitalism has fostered freedom, and vice versa. Societies that have tried non-capitalist systems inevitably fall into tyranny.

For example, [[Venezuela]], while not a perfect country before [[Hugo Chavez]], had freedom and wealth unprecedented in its history. As Chavez has nationalized industries, he has also centralized power for himself, becoming a dictator.

Capitalist societies also generally have higher standards of living compared to their non-capitalist counterparts in terms of per capita GDP, education, healthcare, and poverty rates.

== Quotes ==

“Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity.”

--[[Milton Friedman]], Capitalism and Freedom, 1962.

“Capitalism is essentially the economic system of poor people. That’s what allowed the people that came from humble origins of the world to have economic rights the way only nobility and the high bourgeoisie had it before. So capitalism is essentially a tool for poor people to prosper.”

--Hernando de Soto, PBS Interview, March 30-31, 2001

(cf: [http://www.americansolutions.com/General/?Page=026a3bda-755c-45d8-84d3-c68eef294612 Values - Free Enterprise])

"The only real cure for poverty is production". [[Henry Hazlitt]], from ''Man vs. the [[Welfare]] State''.

== See also ==

*[[Capital]]
*[[Free Enterprise]]
*[[Ludwig von Mises]]
*[[Enterprise]]
*[[planned economy]]
*[[Socialism]]
*[[Welfare]]

==External links==
*[http://www.capmag.com Capitalism Magazine]
*[http://www.aim.org/wls/category/capitalism/ What Liberals Say - Category: Capitalism], [[Accuracy In Media]]

==References==
<references/>

[[Category:Economics]]
[[Category:Business]]
[[Category:Libertarianism]]

Capitalism

2009-09-22T16:31:50Z

RoyP: /* Capitalism and Society */ calling Chavez a 'virtual dictator' implied that he is not one. it has been fixed,

[[Image:Tokyo Stock Exchange.jpg|thumb|Tokyo Stock Exchange]]
'''Capitalism''', also called '''free market economy''' is an economic system where the investment of capital, and production, distribution, income, and prices are determined not by government (as in [[socialism]]) but through the operation of a competitive market where decisions regarding transfer of money, goods (including capital goods), and services are voluntary and private rather than regulated and mandated by government (see [[law of supply and demand]]).

==Overview==
One self-regulating feature of capitalism is competition, which helps maintain fair market value for goods and services. However, ''unrestrained'' or ''pure'' capitalism may sometimes create a positive feedback loop in which a small number of individual accumulations of capital grow ever larger, eventually becoming so few as to limit effective competition, thus ceasing to strictly be free-market capitalism. In this regard, pure capitalism is unstable. Modern political systems have developed regulation mechanisms in an attempt to render capitalism more stable, including anti-trust regulation, trade tariffs, etc.

Since the fall of [[communism]], and the advent of information technology, capitalism is becoming increasingly widespread.

[[Adam Smith]] described the operation of capital accumulation through the productive powers of labor as such,

{{Cquote|Whatever a person saves from his [[revenue]] he adds to his [[capital]], and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book II, Chapter 3, Paragraph 15,] ''Of the Accumulation of Capital, or of Productive and Unproductive Labour'', First Edition 1776.</ref>}}
[[Image:Eco Pillars.jpg|right|320px]]
Smith goes on to describe how the productive powers of labor employed by the owner of a capital allow laborers to reproduce with a profit the value of their maintenance, over and above their own consumption, which then allows for an additional set of hands to be employed. <ref>Adam Smith, ''Wealth of Nations'', Book II, Chapter 3, Paragraph 22.</ref> Smith observes labor is the original purchase price for all the wealth of the world,

{{Cquote|The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour, 2<ref>'Everything in the world is purchased by labour.'—Hume, 'Of Commerce,' in Political Discourses, 1752, p. 12</ref> as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book I, Chapter 5, Paragraph 2,] ''Of the Real and Nominal Price of Commodities'', First Edition 1776.</ref>}}

Real wealth consists not in money, but in the things money will exchange for,

{{Cquote|In order to put industry into motion, three things are requisite; materials to work upon, tools to work with, and the wages or recompense for the sake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth; not in the metal pieces, but in what can be got for them. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 2, Paragraph 37,] ''Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital '', First Edition 1776.</ref>}}

Since wealth does not consist in money, gold, or silver, and labor is the original purchase price, Smith explains how the capitalist system is then put into motion, complete with natural incentives, only Smith does not use the word "capital" here to describe what is needed. Smith explains how a "store of goods", or "stock sufficient to maintain" the original capitalist entrepreneur is necessary;

{{Cquote|When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.

But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 1, Paragraphs 1 & 2,] ''Of the Division of Stock '', First Edition 1776.</ref>}}

The [[division of labor]] is the necessary condition that gives rise to the productive powers of labor that allows for large scale economic growth. By "division of labor", Smith is referring to "specialization of labor", where each worker acquires specific knowledge to apply to a specific task.

{{Cquote|In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides everything for himself, it is not necessary that any stock should be accumulated or stored up beforehand in order to carry on the business of the society. Every man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.

But when the division of labour has once been thoroughly introduced, the produce of a man's own labour can supply but a very small part of his occasional wants. The far greater part of them are supplied by the produce of other men's labour, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own. But this purchase cannot be made till such time as the produce of his own labour has not only been completed, but sold. A stock of goods of different kinds, therefore, must be stored up somewhere sufficient to maintain him, and to supply him with the materials and tools of his work till such time, at least, as both these events can be brought about.

As the accumulation of stock must, in the nature of things, be previous to the division of labour, ...in order to give constant employment to an equal number of workmen, an equal stock of provisions, and a greater stock of materials and tools than what would have been necessary in a ruder state of things, must be accumulated beforehand. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Introduction, Paragraphs 1, 2, & 3] ''Of the Nature, Accumulation, and Employment of Stock,'', First Edition 1776.</ref>}}
{{Cquote|When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book I, Chapter 4, Paragraphs 1] ''Of the Origin and Use of Money'', First Edition 1776.</ref>}}
==Capitalism and Society==
[[Image:Ludwig von Mises.jpg|thumb|100px|Ludwig von Mises]]
Historically, capitalism has fostered freedom, and vice versa. Societies that have tried non-capitalist systems inevitably fall into tyranny.

For example, [[Venezuela]], while not a perfect country before [[Hugo Chavez]], had freedom and wealth unprecedented in its history. As Chavez has nationalized industries, he has also centralized power for himself, becoming a dictator.

Capitalist societies also generally have higher standards of living compared to their non-capitalist counterparts in terms of per capita GDP, education, healthcare, and poverty rates.

== Quotes ==

“Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity.”

--[[Milton Friedman]], Capitalism and Freedom, 1962.

“Capitalism is essentially the economic system of poor people. That’s what allowed the people that came from humble origins of the world to have economic rights the way only nobility and the high bourgeoisie had it before. So capitalism is essentially a tool for poor people to prosper.”

--Hernando de Soto, PBS Interview, March 30-31, 2001

(cf: [http://www.americansolutions.com/General/?Page=026a3bda-755c-45d8-84d3-c68eef294612 Values - Free Enterprise])

"The only real cure for poverty is production". [[Henry Hazlitt]], from ''Man vs. the [[Welfare]] State''.

== See also ==

*[[Capital]]
*[[Free Enterprise]]
*[[Ludwig von Mises]]
*[[Enterprise]]
*[[planned economy]]
*[[Socialism]]
*[[Welfare]]

==External links==
*[http://www.capmag.com Capitalism Magazine]
*[http://www.aim.org/wls/category/capitalism/ What Liberals Say - Category: Capitalism], [[Accuracy In Media]]

==References==
<references/>

[[Category:Economics]]
[[Category:Business]]
[[Category:Libertarianism]]

Capitalism

2009-09-22T16:29:17Z

RoyP: /* Quotes */

[[Image:Tokyo Stock Exchange.jpg|thumb|Tokyo Stock Exchange]]
'''Capitalism''', also called '''free market economy''' is an economic system where the investment of capital, and production, distribution, income, and prices are determined not by government (as in [[socialism]]) but through the operation of a competitive market where decisions regarding transfer of money, goods (including capital goods), and services are voluntary and private rather than regulated and mandated by government (see [[law of supply and demand]]).

==Overview==
One self-regulating feature of capitalism is competition, which helps maintain fair market value for goods and services. However, ''unrestrained'' or ''pure'' capitalism may sometimes create a positive feedback loop in which a small number of individual accumulations of capital grow ever larger, eventually becoming so few as to limit effective competition, thus ceasing to strictly be free-market capitalism. In this regard, pure capitalism is unstable. Modern political systems have developed regulation mechanisms in an attempt to render capitalism more stable, including anti-trust regulation, trade tariffs, etc.

Since the fall of [[communism]], and the advent of information technology, capitalism is becoming increasingly widespread.

[[Adam Smith]] described the operation of capital accumulation through the productive powers of labor as such,

{{Cquote|Whatever a person saves from his [[revenue]] he adds to his [[capital]], and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book II, Chapter 3, Paragraph 15,] ''Of the Accumulation of Capital, or of Productive and Unproductive Labour'', First Edition 1776.</ref>}}
[[Image:Eco Pillars.jpg|right|320px]]
Smith goes on to describe how the productive powers of labor employed by the owner of a capital allow laborers to reproduce with a profit the value of their maintenance, over and above their own consumption, which then allows for an additional set of hands to be employed. <ref>Adam Smith, ''Wealth of Nations'', Book II, Chapter 3, Paragraph 22.</ref> Smith observes labor is the original purchase price for all the wealth of the world,

{{Cquote|The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour, 2<ref>'Everything in the world is purchased by labour.'—Hume, 'Of Commerce,' in Political Discourses, 1752, p. 12</ref> as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book I, Chapter 5, Paragraph 2,] ''Of the Real and Nominal Price of Commodities'', First Edition 1776.</ref>}}

Real wealth consists not in money, but in the things money will exchange for,

{{Cquote|In order to put industry into motion, three things are requisite; materials to work upon, tools to work with, and the wages or recompense for the sake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth; not in the metal pieces, but in what can be got for them. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 2, Paragraph 37,] ''Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital '', First Edition 1776.</ref>}}

Since wealth does not consist in money, gold, or silver, and labor is the original purchase price, Smith explains how the capitalist system is then put into motion, complete with natural incentives, only Smith does not use the word "capital" here to describe what is needed. Smith explains how a "store of goods", or "stock sufficient to maintain" the original capitalist entrepreneur is necessary;

{{Cquote|When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.

But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 1, Paragraphs 1 & 2,] ''Of the Division of Stock '', First Edition 1776.</ref>}}

The [[division of labor]] is the necessary condition that gives rise to the productive powers of labor that allows for large scale economic growth. By "division of labor", Smith is referring to "specialization of labor", where each worker acquires specific knowledge to apply to a specific task.

{{Cquote|In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides everything for himself, it is not necessary that any stock should be accumulated or stored up beforehand in order to carry on the business of the society. Every man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.

But when the division of labour has once been thoroughly introduced, the produce of a man's own labour can supply but a very small part of his occasional wants. The far greater part of them are supplied by the produce of other men's labour, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own. But this purchase cannot be made till such time as the produce of his own labour has not only been completed, but sold. A stock of goods of different kinds, therefore, must be stored up somewhere sufficient to maintain him, and to supply him with the materials and tools of his work till such time, at least, as both these events can be brought about.

As the accumulation of stock must, in the nature of things, be previous to the division of labour, ...in order to give constant employment to an equal number of workmen, an equal stock of provisions, and a greater stock of materials and tools than what would have been necessary in a ruder state of things, must be accumulated beforehand. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Introduction, Paragraphs 1, 2, & 3] ''Of the Nature, Accumulation, and Employment of Stock,'', First Edition 1776.</ref>}}
{{Cquote|When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book I, Chapter 4, Paragraphs 1] ''Of the Origin and Use of Money'', First Edition 1776.</ref>}}
==Capitalism and Society==
[[Image:Ludwig von Mises.jpg|thumb|100px|Ludwig von Mises]]
Historically, capitalism has fostered freedom, and vice versa. Societies that have tried non-capitalist systems inevitably fall into tyranny.

For example, [[Venezuela]], while not a perfect country before [[Hugo Chavez]], had freedom and wealth unprecedented in its history. As Chavez has nationalized industries, he has also centralized power, and become a virtual dictator.

Capitalist societies also generally have higher standards of living compared to their non-capitalist counterparts in terms of per capita GDP, education, healthcare, and poverty rates.

== Quotes ==

“Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity.”

--[[Milton Friedman]], Capitalism and Freedom, 1962.

“Capitalism is essentially the economic system of poor people. That’s what allowed the people that came from humble origins of the world to have economic rights the way only nobility and the high bourgeoisie had it before. So capitalism is essentially a tool for poor people to prosper.”

--Hernando de Soto, PBS Interview, March 30-31, 2001

(cf: [http://www.americansolutions.com/General/?Page=026a3bda-755c-45d8-84d3-c68eef294612 Values - Free Enterprise])

"The only real cure for poverty is production". [[Henry Hazlitt]], from ''Man vs. the [[Welfare]] State''.

== See also ==

*[[Capital]]
*[[Free Enterprise]]
*[[Ludwig von Mises]]
*[[Enterprise]]
*[[planned economy]]
*[[Socialism]]
*[[Welfare]]

==External links==
*[http://www.capmag.com Capitalism Magazine]
*[http://www.aim.org/wls/category/capitalism/ What Liberals Say - Category: Capitalism], [[Accuracy In Media]]

==References==
<references/>

[[Category:Economics]]
[[Category:Business]]
[[Category:Libertarianism]]

Capitalism

2009-09-22T16:29:01Z

RoyP: /* Quotes */

[[Image:Tokyo Stock Exchange.jpg|thumb|Tokyo Stock Exchange]]
'''Capitalism''', also called '''free market economy''' is an economic system where the investment of capital, and production, distribution, income, and prices are determined not by government (as in [[socialism]]) but through the operation of a competitive market where decisions regarding transfer of money, goods (including capital goods), and services are voluntary and private rather than regulated and mandated by government (see [[law of supply and demand]]).

==Overview==
One self-regulating feature of capitalism is competition, which helps maintain fair market value for goods and services. However, ''unrestrained'' or ''pure'' capitalism may sometimes create a positive feedback loop in which a small number of individual accumulations of capital grow ever larger, eventually becoming so few as to limit effective competition, thus ceasing to strictly be free-market capitalism. In this regard, pure capitalism is unstable. Modern political systems have developed regulation mechanisms in an attempt to render capitalism more stable, including anti-trust regulation, trade tariffs, etc.

Since the fall of [[communism]], and the advent of information technology, capitalism is becoming increasingly widespread.

[[Adam Smith]] described the operation of capital accumulation through the productive powers of labor as such,

{{Cquote|Whatever a person saves from his [[revenue]] he adds to his [[capital]], and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book II, Chapter 3, Paragraph 15,] ''Of the Accumulation of Capital, or of Productive and Unproductive Labour'', First Edition 1776.</ref>}}
[[Image:Eco Pillars.jpg|right|320px]]
Smith goes on to describe how the productive powers of labor employed by the owner of a capital allow laborers to reproduce with a profit the value of their maintenance, over and above their own consumption, which then allows for an additional set of hands to be employed. <ref>Adam Smith, ''Wealth of Nations'', Book II, Chapter 3, Paragraph 22.</ref> Smith observes labor is the original purchase price for all the wealth of the world,

{{Cquote|The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour, 2<ref>'Everything in the world is purchased by labour.'—Hume, 'Of Commerce,' in Political Discourses, 1752, p. 12</ref> as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book I, Chapter 5, Paragraph 2,] ''Of the Real and Nominal Price of Commodities'', First Edition 1776.</ref>}}

Real wealth consists not in money, but in the things money will exchange for,

{{Cquote|In order to put industry into motion, three things are requisite; materials to work upon, tools to work with, and the wages or recompense for the sake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth; not in the metal pieces, but in what can be got for them. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 2, Paragraph 37,] ''Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital '', First Edition 1776.</ref>}}

Since wealth does not consist in money, gold, or silver, and labor is the original purchase price, Smith explains how the capitalist system is then put into motion, complete with natural incentives, only Smith does not use the word "capital" here to describe what is needed. Smith explains how a "store of goods", or "stock sufficient to maintain" the original capitalist entrepreneur is necessary;

{{Cquote|When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.

But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 1, Paragraphs 1 & 2,] ''Of the Division of Stock '', First Edition 1776.</ref>}}

The [[division of labor]] is the necessary condition that gives rise to the productive powers of labor that allows for large scale economic growth. By "division of labor", Smith is referring to "specialization of labor", where each worker acquires specific knowledge to apply to a specific task.

{{Cquote|In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides everything for himself, it is not necessary that any stock should be accumulated or stored up beforehand in order to carry on the business of the society. Every man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.

But when the division of labour has once been thoroughly introduced, the produce of a man's own labour can supply but a very small part of his occasional wants. The far greater part of them are supplied by the produce of other men's labour, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own. But this purchase cannot be made till such time as the produce of his own labour has not only been completed, but sold. A stock of goods of different kinds, therefore, must be stored up somewhere sufficient to maintain him, and to supply him with the materials and tools of his work till such time, at least, as both these events can be brought about.

As the accumulation of stock must, in the nature of things, be previous to the division of labour, ...in order to give constant employment to an equal number of workmen, an equal stock of provisions, and a greater stock of materials and tools than what would have been necessary in a ruder state of things, must be accumulated beforehand. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Introduction, Paragraphs 1, 2, & 3] ''Of the Nature, Accumulation, and Employment of Stock,'', First Edition 1776.</ref>}}
{{Cquote|When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book I, Chapter 4, Paragraphs 1] ''Of the Origin and Use of Money'', First Edition 1776.</ref>}}
==Capitalism and Society==
[[Image:Ludwig von Mises.jpg|thumb|100px|Ludwig von Mises]]
Historically, capitalism has fostered freedom, and vice versa. Societies that have tried non-capitalist systems inevitably fall into tyranny.

For example, [[Venezuela]], while not a perfect country before [[Hugo Chavez]], had freedom and wealth unprecedented in its history. As Chavez has nationalized industries, he has also centralized power, and become a virtual dictator.

Capitalist societies also generally have higher standards of living compared to their non-capitalist counterparts in terms of per capita GDP, education, healthcare, and poverty rates.

== Quotes ==

“Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity.”

--[[Milton Friedman]], Capitalism and Freedom, 1962.

“Capitalism is essentially the economic system of poor people. That’s what allowed the people that came from humble origins of the world to have economic rights the way only nobility and the high bourgeoisie had it before. So capitalism is essentially a tool for poor people to prosper.”

--Hernando de Soto, PBS Interview, March 30-31, 2001

(cf: [http://www.americansolutions.com/General/?Page=026a3bda-755c-45d8-84d3-c68eef294612 Values - Free Enterprise])

"The only real cure for poverty is production". [[Henry Hazlitt]], from ''Man vs. the [[Welfare]] State''

== See also ==

*[[Capital]]
*[[Free Enterprise]]
*[[Ludwig von Mises]]
*[[Enterprise]]
*[[planned economy]]
*[[Socialism]]
*[[Welfare]]

==External links==
*[http://www.capmag.com Capitalism Magazine]
*[http://www.aim.org/wls/category/capitalism/ What Liberals Say - Category: Capitalism], [[Accuracy In Media]]

==References==
<references/>

[[Category:Economics]]
[[Category:Business]]
[[Category:Libertarianism]]

User talk:RJJensen

2009-09-22T01:15:04Z

RoyP:

[[/Archive 1]]

Haha, yeah the rain has been murderous all week long! I had the misfortune of planning to drive into Athens today, only to find all the roads underwater! I didn't realize until you messaged me that my talk page has the info intended for my user page, so thank you for your inadvertant help (also, yes, it appears my grammar died while I was writing it!) Are you from the area as well? Always good to meet a fellow southerner who understands the Obama Crisis. There are so many hayseed liberals down here it makes me sick! Don't worry tho, you won't hear me crying out for a confederate south:) Long live a STRONG CONSERVATIVE UNION, with a surplus export of integrity! [[User:RoyP|RoyP]] 20:33, 21 September 2009 (EDT)
::thanks for the update. I'm actually a Yankee now living in Montana, but I have had a strong interest in the South since I studiesd with C. Vann Woodward some years back.[[User:RJJensen|RJJensen]] 20:36, 21 September 2009 (EDT)
:::I can forgive a Yank, I used to be one (Mt. Vernon, Washington)! Unfortunately, that town's Conservative fervor lives solely in the words of one Glenn Beck (that man's done for intelligent conservatism what Sean Penn did for photographers dentistry.) [[User:RoyP|RoyP]] 20:45, 21 September 2009 (EDT)
::::Now, what kind of a snide insult is that? Beck is a thoughtful, honest fighter for the conservative cause, and if people are angered at the government by his exposés, all the better for the nation. Both he, and those of us who respect him, are intelligent people. [[User:DouglasA|DouglasA]] 20:59, 21 September 2009 (EDT)
:::::Forgive any intrusion or stamping upon your own loyalties. But surely you must admit that the movement suffers from a lack of Irving Kristol or William Buckley type figures. I long for the days when conservatism nakedly confessed that the intellectuals were the brains of the movement while the power of the people were its fists. OF COURSE a weapon must be weighted properly, with the correct balances, but it is only in retrospect that people might discuss its craftsmanship and the components which constituted it. I would venture to say that anyone slain by Excalibur would comment on anything but the sharpness of its blade, which in this most basic analogy, would comprise the incisive wit of conservatives who have lived and then gone to meet God in heaven. The fires of anger burn with intense heat in the belly of American conservatism, but to stoke these fires, as Beck often does, produces little but flash and smoke. It will be some current or future leader, a Reagan-type, I pray, who shall light his torch with such a flame and bring it to the halls of Congress or to the Obama home and say, "See, this same flame has burned for ages now let it singe you!". God, conservatism, the side of moral right; all are the same, and united they are all consuming. But it must take SOMEONE...a prophet, a politician who does God's work, a priest with God's word in him...someone, SOMEONE must carry that torch. [[User:RoyP|RoyP]] 21:15, 21 September 2009 (EDT)

User talk:RJJensen

2009-09-22T00:45:21Z

RoyP:

User talk:RJJensen

2009-09-22T00:33:41Z

RoyP: