September 23 - September 23, 2010 Capitalism and Society...

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September 23, 2010 Capitalism and Society – Phelps article Essay #4 next Tuesday Academic discipline of economics was born from Adam Smiths’ criticism of mercantilist system He asserted that the sole purpose of economic activity is consumption This is how we understand rational utility maximization There are also costs – disutility – that we put up with to acquire that which we seek Labor is a disutility People exert effort in exchange for a reward. We want to minimize pain, maximize pleasure. Resource optimization. Gov’t restraints get in the way. None of this is what caused capitalism Capitalism was the result of different thinking from Smith. Phelps wants to establish a firmer basis for capitalism He argues for a recovery of the basis that was once there at the beginning He says that achieving standard of living is not the purpose of capitalism There are economic systems, which are not quite capitalist, with all kinds of government intervention that have a higher standard of living than true capitalists. Vitalism – a label for the conception of human nature in which a
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September 23 - September 23, 2010 Capitalism and Society...

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