The Concise Encyclopedia of Economics
FEATURED TOPIC

Capitalism

Robert Hessen

"Capitalism," a term of disparagement coined by socialists in the mid-nineteenth century, is a misnomer for "economic individualism," which Adam Smith earlier called "the obvious and simple system of natural liberty" (Wealth of Nations). Economic individualism's basic premise is that the pursuit of self-interest and the right to own private property are morally defensible and legally legitimate. Its major corollary is that the state exists to protect individual rights. Subject to certain restrictions, individuals (alone or with others) are free to decide where to invest, what to produce or sell, and what prices to charge. There is no natural limit to the range of their efforts in terms of assets, sales, and profits; or the number of customers, employees, and investors; or whether they operate in local, regional, national, or international markets....

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ALSO OF INTEREST

Immigration

George J. Borjas

Housing

Benjamin Powell and Edward Stringham

Gary Becker

Biography

Creative Destruction

W. Michael Cox and Richard Alm

Energy

Jerry Taylor and Peter Van Doren

Health Care

Michael A. Morrisey

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FEATURED BIOGRAPHY

Alfred Marshall

(1842-1924)

Alfred Marshall was the dominant figure in British economics (itself dominant in world economics) from about 1890 until his death in 1924. His specialty was microeconomics--the study of individual markets and industries, as opposed to the study of the whole economy. In his most important book, Principles of Economics, Marshall emphasized that the price and output of a good are determined by both supply and demand: the two curves are like scissor blades that intersect at equilibrium. Modern economists trying to understand why the price of a good changes still start by looking for factors that may have shifted demand or supply, an approach they owe to Marshall....

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