25 terms

Economic theory


Terms in this set (...)

policy allowing business to operate with little or no government interference
an economic system based on private property and free enterprise
Law of Self-Interest
Wealth created by entrepreneurs (owners) chasing after profit
Law of Competition
a law of economics created by Adam Smith that states that in a free market economy, everyone competes with everyone else. For a business to be profitable, products must be made more efficiently and sold at a lower price than the competition.
Law of Supply and Demand
a law which states that when supplies of goods and services become plentiful, prices tend to drop. When supplies become scarcer, prices tend to rise.
Invisible Hand
a term coined by Adam Smith to describe the self-regulating nature of the marketplace
An economic system in which government owns some factors of production and participates in answering economic questions. It offers some security and benefits to those who are less fortunate, homeless, or under-employed.
The theory, proposed by Jeremy Bentham in the late 1700s, that government actions are useful only if they promote the greatest good for the greatest number of people.
having the characteristics of an ideally perfect place
a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
Adam Smith
Scottish political economist and philosopher. His Wealth of Nations (1776) laid the foundations of classical free-market economic theory, government should not interfere with economics. Advocates Laissez Faire and founder of "invisible hand"
Thomas Malthus
Opposed Socialism- an English economist who argued that increases in population would outgrow increases in the means of subsistence (1766-1834)
David Ricardo
Capitalism- Influence of a Low Price of Corn on the Profits of Stock
Alexis de Tocqueville
Utilitarianism- French political writer noted for his analysis of American institutions (1805-1859)
Jeremy Bentham
creator of Utilitarianism. Advocates "the greatest happiness for the greatest number." Used the Pain-Pleasure litmus test, rather than ideology
John Stuart Mill
English philosopher and economist remembered for his interpretations of empiricism and utilitarianism (1806-1873)
Robert Owen
Utopian- Welsh industrialist and social reformer who founded cooperative communities (1771-1858)
Charles Fourier
Utopian- French social theorist-criticized capitalism-wanted socialist utopia and emancipation of women. Theory of Four Movements.
Karl Marx
Communism- German philosopher, economist, and revolutionary. With the help and support of Friedrich Engels he wrote The Communist Manifesto (1848) and Das Kapital (1867-1894). These works explain historical development in terms of the interaction of contradictory economic forces, form the basis of all communist theory, and have had a profound influence on the social sciences.
Friedrich Engels
socialist who wrote the Communist Manifesto with Karl Marx in 1848 (1820-1895)
Herbert Spencer
Social Darwinism- English philosopher and sociologist who applied the theory of natural selection to human societies (1820-1903)
organization of workers who would "strike" to negotiate better working conditions, less hours of work, and higher pay
Enclosure Acts
privatization of communal resources, creation of labor force; land taken from peasants; sent massive amounts of people to work in the city, in factories with machines
Workers concentrate on producing those goods and services for which they have a competitive advantage.