Political Economy - Explain the difference between capitalism

Topic Two, Political Economy:

This essay asks you to explain the difference between capitalism and socialism and comment on if and how the losers of capitalist competition should be supported by the state. (This essay is mostly about definitions and examples, although I will ask you to make a moral judgment at the end).

Begin by defining the difference between capital goods and consumer goods, and between capitalists and laborers. Illustrate your definitions with examples of each. Then use these definitions to define capitalism and socialism as defined in Thomas Metcalf’s article. Give examples of how America is primarily a capitalist country. (30 points)

Describe two arguments in favor of capitalism found in Thomas Metcalf’s article, and then describe two arguments in favor of socialism found in his article. (30 points)

Using data from the lecture slides, briefly explain how much prosperity has been generated since the advent of industrial capitalism in the early 1800s. (20 points)

Finally, consider that while technological innovation and international trade are both essential parts of modern capitalism, they also take away some people's jobs. Many of these people lose their jobs not because they are lazy, talentless, or corrupt, but simply because the market has changed. Unfortunately, some of them are not ready for retirement, but may be too old to start a new career. Do you think the government (or the person's previous employer) should economically compensate these people? If so, how much? Is supporting involuntarily unemployed people compatible with capitalism? (40 points)