5c - Capitalism - Capitalism

5c - Capitalism - Capitalism - From...

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From: [email protected] Sent: Saturday, November 09, 2002 3:18 PM To: [email protected] Subject: Britannica Student Encyclopedia Article capitalism Britannica Student Encyclopedia The word economics comes from a Greek word that means “household management”—performance of the tasks and services that allow a family to survive and prosper. Thus economic functions are activities devoted to satisfying the primary needs of food, clothing, and shelter—needs that are common to all human beings. Economic functions also satisfy desires for goods and services that are not genuine needs but that people in a prosperous country want. Such goods and services are often called luxuries, but today some luxuries are considered necessities by many people: such things as automobiles, television sets, car phones, and visits to the dentist. One of the ways goods and services are provided is through an economic system called capitalism. Other names for this system are free market economy and free enterprise. All three terms were coined in the late 19th and the early 20th century to describe economic arrangements that began developing in Europe several centuries ago. The word capital refers to what are called factors of production. These include the money, land, buildings, and machinery that it takes to operate a factory or farm. The capitalist is the individual—or group of individuals— who supplies the money to get the enterprise going. The other two terms, free market economy and free enterprise, put a slightly different slant on capitalism. They have in common the word free. The implication is that people have individual liberty and the right to own property. They also have the right to do what they wish with their property, as long as it does not harm anyone else. These freedoms set capitalism apart from all other kinds of economic arrangements: all others are top- down, command-and-control political systems in which personal freedom and the rights of property are sacrificed for the good of the state. In the context of capitalism, the term private property has a specific definition. It signifies the means of production. A farm as property is the means by which food is produced; and a factory as property is the means by which durable goods are produced. As an example of services, a physician's office and equipment are the physician's property and are used in the treatment of patients. The heart of capitalism is the producer's right to make what he wants and the consumer's right to choose what to buy. Goods and Services There is a difference between goods and services. In the case of goods, something is produced: food, clothing, cars, houses, and more. Goods are also called products or commodities (though sometimes commodities are natural resources). Services are not products, though services use many products. A motion picture, for example, is a service. To show it requires film, a projector, and a theater. Customers see the movie but they do not take anything home with them except the memory of the entertainment.
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There is another difference as well. Products provide the basic wealth of society. Wealth must be understood as
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