In your own words, explain the concept of the “invisible hand” as it relates to economic theory. Why is it that an entrepreneur with seemingly selfish motives can create benefits for the larger society? Why is this a benefit that arises from capitalism and not from other economic systems?
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In your own words, explain the concept of the “invisible hand” as it relates to economic theory. Why is it that an entrepreneur with seemingly selfish motives can create benefits for the larger society? Why is this a benefit that arises from capitalism and not from other economic systems?
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- Define economics and describe the two types of economic systems: capitalism and command economy.Is capitalism associated more with a market or command economy? Why would capitalism be able to do "millions of things better" than a centrally planned economy? What things do you think a capitalist society would be more successful at than a centrally planed society?Marx and Engels ([1848] 1967) argued that market-based capitalism was the most dynamic force in the world. Originating in Western Europe, this economic system was based on capital accumulation, the spread of markets, and the exploitation of labor. This latter idea was based on the notion that labor is the source of all value in the production process, but labor is only recompensed part of that value, in the form of wages; the rest goes to the owner of the capital as profit Under the capitalist mode of production, profit comes from the exploitation of human labor. Under the capitalist mode of production, profit comes from the exploitation of human labor. However, the accumulation of capital and new technology displaces labor. Joseph A. Schumpeter (1939, 1942, 1991) argued that growth was supply driven by the factors of production, with entrepreneurial innovation the most important of these. He believed in a “raw instinct” that drove entrepreneurs. He saw development as being driven by…
- Why does a modern capitalist economic system require the existence of markets?What are the main differences between a capitalist (market-based) and socialist (command) economic system?what theory is biased on the idea that two economic systems capitalism and socialism will eventually adopt features of the other until there is a hybrid economic system in all societies?
- In a Capitalistic economy, due to the "mixed market" and economic freedoms that are a part of this system, is there a greater gap between the rich and the poor?Under its former President Hugo Chavez, Venezuela moved from a Capitalist economy to a Socialist economy and has remained so after Chavez’s death. For example, the government took over and now operates a chain of stores that used to be run as a private business. Prices in the government-run stores are lower than prices were in a Capitalist economic system. The government posts signs in these stores like the one below: In case you don’t read Spanish, the sign says: Product Description Diana Oil Fair Price 4.73 Capitalist Price 7.00 Your Saving 32% The implication, of course, is that prices in a Capitalist economy are not fair. Explain whether or not this is true. Be sure to address each of the following in your explanation: 4. in a Capitalist…The YouTube video "Why Capitalism Works" seems to provide a compelling case for why capitalism is beloved by many Americans. Yet from a Marxian perspective, the video fails to address a flawed aspect of the capitalist enterprise. What does the video intentionally(?) hide and briefly explain why a Marxist would find the capitalist economic model problematic? What basic solution would it offer to enhance the quality of workers' lives?