Civic Literacy Curriculum
Question 12: What is the economic system in the United States?
What is the economic system in the United States?
A. a communist economy
B. a single economy
C. a barter economy
D. a capitalist or market economy
A capitalist economy focuses on the ideas of private property and voluntary exchange. Adam Smith, a Scottish philosopher, was one of the first to put forth the idea that the market not only will regulate itself, but, if left alone, will also benefit society far more than any engineered attempt. In short, it’s a far, far better thing to let the buyers and the sellers act in their own best interests then it is to let the government control the economy (a.k.a. mercantilism).
How so? Two words: innovation and efficiency.
Under capitalism, sellers have the ability, and the right, to make as much money as they want. All they have to do is sell a product or provide a service that the buyers want and are willing to pay for. It sounds easy, but it isn’t. Take pizza, for example. Think about how many pizza parlors there are in the local area. For most of us, the answer is at least two or three! In some neighborhoods, there may be seven or eight! The parlor owners must innovate and create a product that stands out in some manner (e.g., tastes better, is healthier, is bigger, is a triangle, etc.). They also have to be efficient and manufacture those pizzas in the least expensive manner possible, which includes reducing waste. The end result is a product that people find appetizing, edible, and affordable. But it’s not just pizza. It’s the same for every single product and service out there. And it all begins with the fact that people are in control of the market.
Reading old texts helps us understand what influences our practices today. Though not the first philosopher to argue for a free market, Adam Smith is certainly one of the best known. His argument that the “invisible hand” will guide the market, influencing the buyers and the sellers and benefiting society, is based on the idea that people will act in their best interests in ways that are mutually beneficial for both parties. This activity will allow the students to discuss the ideas that Smith presented in 1776 and understand how these ideas are still influencing us today.
- Provide students with a copy of the following:
- An excerpt from Smith’s Wealth of Nations. The School of Civic and Economic Thought and Leadership has a first edition copy of the Wealth of Nations in its Civic Classics Collection Virtual Guide. View it here.
- Reading questions
- Socratic seminar guidelines
- Allow students time to prepare — at least a class period. Depending on the class, you may want to assign the reading a few days in advance.
- If this is a graded activity, provide the students with a copy of the rubric.
- If you wish, have a “speaking stick” — generally a small object that denotes the speaker. This is usually a beanbag or small plush animal. Whoever holds the “stick” is the speaker. When finished speaking, the student chooses the next speaker by handing or gently tossing it to the next speaker.
The Teaching Materials for this exercise includes a rubric.
- On the day that you introduce the assignment, review the guidelines for a successful Socratic seminar.
- On the day of the seminar, arrange the desks in a circle.
- If using a “speaking stick” for the first time, explain the rules of use to the students. 4. Begin the seminar by asking for someone to share his or her answer to one of the questions provided.
- Let the students take it from there. If conversation begins to lag, ask a question to move it forward.
Alternative Classroom Setup:
Rather than have one large circle, you may wish to have an inner circle and an outer circle. The inner circle participants will discuss the excerpt and ideas, and the outer circle participants will take notes on the points raised. About halfway through the seminar, you can have the two groups switch.
Below are two discussion prompts that can be used by teachers in a classroom setting.
- The first discussion prompt will be one that is designed to support students that are not really understanding the content in a way that would help them to answer the test question.
- The second discussion prompt will be one that is designed to further student understanding of the content by making real-world connections, including connections to current events, and historical events.
A capitalist economy allows people to decide what they want to make, sell, and buy. If people want to buy pineapple pizza, then someone will be sure to provide it -- and at a price that both sides agree upon. Agreement is the key here. If the sides disagree, then either no one will sell or no one will buy, which means that no one will make money. There is no incentive to buy or sell if there is no benefit.
Imagine if the government dictated production quotas, such as 100 tons of nails or 500 million light bulbs. If your factory meets the quota, then you get paid. It doesn’t matter if the products sell. It just matters that you meet the quota. What do you think could go wrong in a system like this? How is this system different from capitalism?
There are often proposals today to socialize various industries in the United States, which means that the government directly operates them. What are the benefits and drawbacks of socializing an industry? What are the benefits and drawbacks of allowing market choices to determine the production and price of products? Think of some industries and how they would be affected if they were socialized.