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What conditions created a feudal system in Europe?
- Old system collapsed and was replaced by feudalism (fall of roman empire)
- Lords provided serfs with protection and leadership in exchange for serfs’ military service
Over time, what market factors encouraged new businesses and labor mobility?
- Improved agricultural techniques
- Creation of merchant/trader occupations
- Growth of towns
- Creation of markets for selling/buying of products
- Labor became for free and mobile
- Creativity --> improved agriculture --> food surplus
- Food surplus --> people leaving agriculture for new jobs --> creation of towns
Changes in religious attitudes towards business.
- Change because people saw the benefits that merchants brought to theircommunities
- They brought new products and new knowledge
How did the Muslims and Chinese help Western growth?
How was Europe's growth helped by science?
- Systematic exploration of the new world
- Tech improvements changed economy
- Chinese tech included gun powder and printing
- Steam engines
How were stronger national governments good and bad for capitalism
- Nations competed with each other to build up their local economies and expand overseas
- Trade was still difficult because every community had its own regulations/money
- Good result was stronger national gov with standardized regulations and money
What was a "guild"?
- Guilds were organizations of craftsmen
- Set up quality standards for products and appropriate prices
- Early version of labor unions
- Resisted the introduction of mass production technology
Who was Adam Smith and what did he teach?
- Father of modern economics
- Wrote “The Wealth of Nations”
- Attacked foundations of mercantilism
What are social market capitalism’s features?
- Strong protection for workers
- Strong safety net
- Gov’t support for national and European companies vs. foreign ones
Good and bad results of social market capitalism?
- High standard of living
- Many strong European companies
- European and foreign companies are leaving Europe
- Unemployment has become very high
- Social generosity is no longer as affordable
What’s the worst/most harmful type of European unemployment?
- Frictional- people in between jobs or looking for first job
- Cyclical- short term unemployment caused by low demand in economy (recession)
- Structural- caused by mismatch between job seeker skills and employer needs
Arguments for the euro
- Greater/easier competition- easy to make price comparisons
- More efficiency- companies need to become fore efficient to compete
- Created larger European financial market- lower interest rates
- Further step towards political union
Arguments against the euro
- Loss of sovereignty- countries no longer control their own monetary policy
- If you use euro, your country has to help in euro crises