2. What is Capitalism?
Capitalism keeps the production of
cheaper and more efficiently made
goods and services.
A capitalist can invest their money into
a business activity if it is profitable
Capitalism states that the best use of
money is to invest
Money or resources invested to start a
business
3. Adam Smith and Modern
Capitalism
Adam Smith was a student and
supporter of capitalism
Studied at a university in Glasgow and
Oxford in England
Taught at Glasgow
Published “The Wealth of the Nations”
– most important studies of economics
Capitalism’s first great champion
4. More on Adam Smith
In 1776, Smith published his
book, The Wealth of Nations
In his book he discussed: the law of
supply and demand, division of
labor, and how profit should be used
to make more profit
Smith believed that no one, except the
government to prevent unfair
advantages should interfere in any
transaction
5. Forms of Capitalism
Mercantilism
In mercantilism, countries grew rich
and powerful by controlling trade
Countries should sell more goods than
they buy
Advisors said that the best way to
keep money is to make tariffs – very
high fees on goods produced in a rival
country
6. US and Capitalism
Today, the US uses the capitalism
system
We have adopted some socialist ideas
7. Vocabulary
Capitalism – money or property,
especially when used to make more
money
Division of labor – different people doing
different jobs that contribute to the same
task
Free market – when both the seller and
the buyer agree on a fair price without
anyone else’s influence or control
Standard of living – all the things people
have to make their lives comfortable
