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Adam Smith & laissez-faire capitalism:
Capitalism is an economic system wherein capital (machines, etc) is owned by individuals & groups who are free to use it as they will.
Mercantile capitalism:
16h-18th & 19th centuries.
National wealth = f(gold + silver)
Taxing this national wealth gives the govt. money with which to build military power that allows it to attack other countries & take their stuff.
- Exports > Imports
- Colonies
- Monopolies
- Govt. grants & subsidies
Laissez-faire capitalism:
1. Smith attacks tariffs.
- They reduce competition
- Solution: Free trade.
2. Smith attacks monopolies.
- No competition:
- High prices & low quality.
- Solution: End monopolies.
- Low prices & high quality.
Individual good will lead to collective good. Liberalism aims to free the economy.
