Thursday, September 16, 2010

Honors World History II: 17 September 2010

Current Events:

Lord Patten, Government representative for the Pope's visit, thinks the Pope has 'many important things to say' despite abuse scandals.

Section 1 The Scientific Revolution
Sixteenth-century Europeans began to question the scientific assumptions of the ancient authorities and to develop new theories about the universe. Nicholas Copernicus, Johannes Kepler, and Galileo Galilei revolutionized astronomy. Copernicus claimed that the sun, not the earth, was at the center of the universe—an idea considered heresy by the Catholic Church. Equally revolutionary were Isaac Newton's explanations of gravity and the movement of the planets. There were breakthroughs in medicine and chemistry, and numerous women contributed to the body of scientific research. The new view of the universe affected Western philosophy. The Frenchman Rene Descartes, the first rationalist, declared that matter could be independently investigated by reason. Francis Bacon, an English philosopher, developed the scientific method—a system for collecting and analyzing evidence.
At this point, we will make a transition to:

Chapter 10: Revolution and Enlightenment, 1550–1800, Section 2 The Enlightenment

The Scientific Revolution gave rise to the Enlightenment, an eighteenth-century movement that stressed the role of philosophy and reason in improving society. Enlightenment intellectuals, known as philosophes, were chiefly social reformers from the nobility and the middle class. They often met in the salons of the upper classes to discuss the ideas of such giants as Montesquieu, Voltaire, and Diderot. In the economic sphere, Adam Smith put forth the doctrine of laissez-faire economics. The later Enlightenment produced social thinkers such as Jean-Jacques Rousseau and an early advocate of women's rights, Mary Wollstonecraft. Salon gatherings, along with the growth of book and magazine publishing, helped spread Enlightenment ideas among a broad audience. Most Europeans were still Christians. However, the desire for a more spiritual experience inspired new religious movements, such as the Methodism of John Wesley.

* Explain how science led to the Enlightenment.
* Compare the ideas of Hobbes and Locke.
* Identify the beliefs and contributions of the philosophes.
* Summarize how economic thinking changed during this time.

Terms, People, and Places

philosophe (notice the spelling: this is not the same thing as philosopher)

separation of powers



social contract

natural law

Thomas Hobbes

John Locke

natural right

salon (there is a common everyday word, but in reference to the Enlightenment, it means a physical place more specific and relates directly to the Enlightenment)

I will create a new page on our Shanawiki (Cf. site as well to create a Quiz/Test Study page.
Note Taking

Reading and Listening Skill: Summarize Draw a table like the one shown here. As you read the section, summarize each thinker’s works and ideas.

Path to the Enlightenment
By the early 1700s, European thinkers felt that nothing was beyond the reach of the human mind. Through the use of reason, insisted these thinkers, people and governments could solve every social, political, and economic problem. In essence, these writers, scholars, and philosophers felt they could change the world.

The Scientific Revolution of the 1500s and 1600s had transformed the way people in Europe looked at the world. In the 1700s, other scientists expanded European knowledge. For example, Edward Jenner developed a vaccine against smallpox, a disease whose path of death spanned the centuries.
Age of Enlightenment In Europe, 1:59

Applying science to the physical world, Copernicus, Kepler, Galileo, and Newton demonstrated that the universe operates according to natural laws which could be discovered by reason. Applying reason to the affairs of men, Locke, Montesquieu, Voltaire, Rousseau, and Diderot put forth ideas of democracy, freedom, and equality. These ideals were translated into action as the American and French Revolutions.

Scientific successes convinced educated Europeans of the power of human reason. Natural law, or rules discoverable by reason, govern scientific forces such as gravity and magnetism. Why not, then, use natural law to better understand social, economic, and political problems? Using the methods of the new science, reformers thus set out to study human behavior and solve the problems of society. In this way, the Scientific Revolution led to another revolution in thinking, known as the Enlightenment. Immanuel Kant, a German philosopher best known for his work The Critique of Pure Reason, was one of the first to describe this era with the word “Enlightenment.” Despite Kant’s skepticism about the power of reason, he was enthusiastic about the Enlightenment and believed, like many European philosophers, that natural law could help explain aspects of humanity.

Reading Check


What was Newton's main contribution to Enlightenment thought?

Philosophes and Their Ideas
In the 1700s, there was a flowering of Enlightenment thought. This was when a group of Enlightenment thinkers in France applied the methods of science to understand and improve society. They believed that the use of reason could lead to reforms of government, law, and society. These thinkers were called philosophes (fee loh zohfs), which means “philosophers.” Their ideas soon spread beyond France and even beyond Europe.

Born to wealth, Charles Louis de Secondat (1689–1755), pictured here, inherited the title Baron de Montesquieu from his uncle. Like many other reformers, he did not let his privileged status keep him from becoming a voice for democracy. His first book titled Persian Letters ridiculed the French government and social classes. In his work published in 1748, The Spirit of the Laws, he advanced the idea of separation of powers—a foundation of modern democracy

An early and influential thinker was Baron de Montesquieu (mahn tus kyoo). Montesquieu studied the governments of Europe, from Italy to England. He read about ancient and medieval Europe, and learned about Chinese and Native American cultures. His sharp criticism of absolute monarchy would open doors for later debate.

In 1748, Montesquieu published The Spirit of the Laws, in which he discussed governments throughout history. Montesquieu felt that the best way to protect liberty was to divide the various functions and powers of government among three branches: the legislative, executive, and judicial. He also felt that each branch of government should be able to serve as a check on the other two, an idea that we call checks and balances. Montesquieu’s beliefs would soon profoundly affect the Framers of the United States Constitution.

François-Marie Arouet, pictured here and known as Voltaire (1694–1778) was an impassioned poet, historian, essayist, and philosopher who wrote with cutting sarcasm and sharp wit. Voltaire was sent to the Bastille prison twice due to his criticism of French authorities and was eventually banned from Paris. When he was able to return to France, he wrote about political and religious freedom. Voltaire spent his life fighting enemies of freedom, such as ignorance, superstition, and intolerance.

Probably the most famous of the philosophes was François-Marie Arouet, who took the name Voltaire. “My trade,” said Voltaire, “is to say what I think,” and he did so throughout his long, controversial life. Voltaire used biting wit as a weapon to expose the abuses of his day. He targeted corrupt officials and idle aristocrats. With his pen, he battled inequality, injustice, and superstition. He detested the slave trade and deplored religious prejudice.

Heated Debate

Rousseau (left) and Voltaire (right) are pictured here in the midst of an argument. Even though the philosophes were reform-minded, they disagreed about some issues. The important point is that the Enlightenment tradition indicated that reasonable, rational people could dispute without killing one another. Debate, disagreement, and dialogue, along with the use of reason was emphasized.

Voltaire’s outspoken attacks offended both the French government and the Catholic Church. He was imprisoned and forced into exile. Even as he saw his books outlawed and even burned, he continued to defend the principle of freedom of speech.


Enlightenment thinker Denis Diderot (dee duh roh) compiled a controversial 28-volume work called the Encyclopedia, which was published between 1751 and 1772. This work was a forum for Enlightenment thinkers such as Montesquieu, Rousseau, and Voltaire. These thinkers believed that with the power of reason, they could fix the problems of society. Although the Encyclopedia was banned in many places and censored in others, it would prove to be a major factor in the years of revolutions to come. It contains the passage below on freedom.

“No man has received from nature the right to give orders to others. Freedom is a gift from heaven, and every individual of the same species has the right to enjoy it as soon as he is in enjoyment of his reason.”

—Denis Diderot
As the editor, Diderot did more than just compile articles. His purpose was “to change the general way of thinking” by explaining ideas on topics such as government, philosophy, and religion. In these articles, the philosophes denounced slavery, praised freedom of expression, and urged education for all. They attacked divine-right theory and traditional religions. Critics raised an outcry. The French government argued that the Encyclopedia was an attack on public morals, and the pope threatened to excommunicate Roman Catholics who bought or read the volumes.

Despite these and other efforts to ban the Encyclopedia, more than 4,000 copies were printed between 1751 and 1789. When translated into other languages, the Encyclopedia helped spread Enlightenment ideas throughout Europe and across the Atlantic Ocean to the Americas.

Reading Check


What were the major contributions of Montesquieu, Voltaire, and Diderot to the Enlightenment?

Toward a New Social Science
French thinkers known as physiocrats focused on economic reforms. Like the philosophes, physiocrats based their thinking on natural laws. The physiocrats claimed that their rational economic system was based on the natural laws of economics.


Physiocrats rejected mercantilism, which required government regulation of the economy to achieve a favorable balance of trade. Instead, they urged a policy of laissez faire (les ay fehr), allowing business to operate with little or no government interference. Physiocrats also supported free trade and opposed tariffs.

Scottish economist Adam Smith greatly admired the physiocrats. In his influential work The Wealth of Nations, he argued that the free market should be allowed to regulate business activity. Smith tried to show how manufacturing, trade, wages, profits, and economic growth were all linked to the market forces of supply and demand. Wherever there was a demand for goods or services, he said, suppliers would seek to meet that demand in order to gain profits. Smith was a strong supporter of laissez faire. However, he felt that government had a duty to protect society, administer justice, and provide public works. Adam Smith’s ideas would help to shape productive economies in the 1800s and 1900s.

Power of the Market - Invisible Hand, 1:14

In-class assignment: How does an invisible hand guide economic activity in a free market according to Adam Smith?

Milton Friedman explains how an invisible hand guides economic activity in a free market.

Investors in Paris, France, 1720

Beccaria and Justice

Reading Check


What is the concept of laissez-faire?

The Later Enlightenment

Jean-Jacques Rousseau (roo soh) and quill pen

Rousseau Stirs Things Up: Cf.

In Jean-Jacques Rousseau’s most important work, The Social Contract (1762), he argued that in order to be free, people should do what is best for their community. Rousseau felt that society placed too many limitations on people’s behavior. He believed that some controls were necessary, but that they should be minimal. Additionally, only governments that had been freely elected should impose these controls. Rousseau had many supporters who were inspired by his passionate writings. European monarchs, on the other hand, were angry that Rousseau was questioning authority. As a result, Rousseau worried about persecution for much of his life. The “chains” below represent the social institutions that confined society.

“Man is born free, and everywhere he is in chains.”

—Rousseau, The Social Contract

Creative Quotations from Jean Jacques Rousseau, 1:11

In-class assignment: paraphrase one of Rousseau's statements in your own words (email/hand in with the daily HW).

A thought provoking collection of Creative Quotations from Jean Jacques Rousseau (1712-1778); born on Jun 28. French philosopher, educational reformer, author; He was an influential educational reformer; His teacher-student contract changed education.

Rousseau believed that people in their natural state were basically good. This natural innocence, he felt, was corrupted by the evils of society, especially the unequal distribution of property. Many reformers and revolutionaries later adopted this view. Among them were Thomas Paine and Marquis de Lafayette, who were leading figures of the American and French Revolutions.

Reading Check


What were Rousseau's basic theories as presented in The Social Contract and Emile?

Thomas Hobbes and John Locke, two seventeenth-century English thinkers, set forth ideas that were to become key to the Enlightenment. Both men lived through the upheavals of the English Civil War. Yet they came to very different conclusions about human nature and the role of government.

Audio Background: Hobbes and Locke Have Conflicting Views


Thomas Hobbes outlined his ideas in a work titled Leviathan. In it, he argued that people were naturally cruel, greedy, and selfish. If not strictly controlled, they would fight, rob, and oppress one another. Life in the “state of nature”—without laws or other control—would be “solitary, poor, nasty, brutish, and short.”

To escape that “brutish” life, said Hobbes, people entered into a social contract, an agreement by which they gave up their freedom for an organized society. Hobbes believed that only a powerful government could ensure an orderly society. For him, such a government was an absolute monarchy, which could impose order and compel obedience.
The title page, pictured here, from Leviathan (1651) by Hobbes demonstrates his belief in a powerful ruler. The monarch here represents the Leviathan who rises above all of society.

John Locke (1632–1704) had a more optimistic view of human nature than did Hobbes. He thought people were basically reasonable and moral. Further, they had certain natural rights, or rights that belonged to all humans from birth. These included the right to life, liberty, and property.
John Locke and a book of his writings

In Two Treatises of Government (1690), Locke argued that people formed governments to protect their natural rights. The best kind of government, he said, had limited power and was accepted by all citizens. Thus, unlike Hobbes, Locke rejected absolute monarchy. England during this time experienced a shift in political power known as the Glorious Revolution. James II, an unpopular absolute monarch, left the throne and fled England in 1688. Locke later wrote that he thought James II deserved to be dethroned for violating the rights of the English.

Locke's Influence on American Constitutional Ideas: Life, Liberty, and Property (the pursuit of happiness)

Locke proposed a radical idea about this time. A government, he said, has an obligation to the people it governs. If a government fails its obligations or violates people’s natural rights, the people have the right to overthrow that government. Locke’s idea would one day influence leaders of the American Revolution, such as Benjamin Franklin, Thomas Jefferson, and James Madison. Locke’s idea of the right of revolution would also echo across Europe and Latin America in the centuries that followed.

The reason why men enter into society is the preservation of their property; and the end while they choose and authorize a legislative is that there may be laws made, and rules set, as guards and fences to the properties of all the society.
"Whensoever, therefore, the legislative [power] shall transgress4 this fundamental rule of society, and either by ambition, fear, folly, or corruption, endeavor to grasp themselves, or put into the hands of any other, an absolute power over the lives, liberties, and estates of the people, by this breach of trust they forfeit the power the people had put into their hands for quite contrary ends, and it devolves5 to the people; who have a right to resume their original liberty, and by the establishment of a new legislative (such as they shall think fit), provide for their own safety and security. . . .”
John Locke

In-class assignment

Thinking Critically

1. Draw Inferences

According to Locke, how should a land be governed? Why do you think this is the case?

2. Identify Central Issues

What does Locke say can happen if a government fails to protect the rights of its people?

Rights of Women
The Enlightenment slogan “free and equal” did not apply to women. Though the philosophes said women had natural rights, their rights were limited to the areas of home and family.

By the mid- to late-1700s, a small but growing number of women protested this view. Germaine de Staël in France and Catharine Macaulay and Mary Wollstonecraft in Britain argued that women were being excluded from the social contract itself. Their arguments, however, were ridiculed and often sharply condemned.

Creative Quotations from Mary Wollstonecraft Shelley, 1:26

In-class assignment: paraphrase one of Wollstonecraft's sayings in your own words and email/hand-in with your daily HW.

A thought provoking collection of Creative Quotations from Mary Wollstonecraft Shelley (1797-1851); born on Aug 30. English author; She is best known as the creator and author of "Frankenstein," 1818.

Wollstonecraft was a well-known British social critic. She accepted that a woman’s first duty was to be a good mother but felt that a woman should be able to decide what was in her own interest without depending on her husband. In 1792, Wollstonecraft published A Vindication of the Rights of Woman. In it, she called for equal education for girls and boys. Only education, she argued, could give women the tools they needed to participate equally with men in public life.

Reading Check


How did Mary Wollstonecraft use the Enlightenment ideal of reason to advocate rights for women?

Social World of the Enlightenment

The Growth of Reading

The Salon

New literature, the arts, science, and philosophy were regular topics of discussion in salons, or informal social gatherings at which writers, artists, philosophes, and others exchanged ideas. The salon originated in the 1600s, when a group of noblewomen in Paris began inviting a few friends to their homes for poetry readings. By the 1700s, some middle-class women began holding salons. Here middle-class citizens could meet with the nobility on an equal footing to discuss and spread Enlightenment ideas.

Madame Geoffrin (far right in blue), in her famous salon where Enlightenment thinkers gathered to share ideas.

Madame Geoffrin (zhoh fran) ran one of the most respected salons. In her home on the Rue St. Honoré (roo sant ahn ur ay), she brought together the brightest and most talented people of her day. The young musical genius Wolfgang Amadeus Mozart played for her guests, and Diderot was a regular at her weekly dinners for philosophers and poets.

Reading Check


What was the importance of salons?

Religion in the Enlightenment

John Wesley Sermon: Thoughts on War, 5:30

Mark Topping as John Wesley. Taken from the DVD dramatising significant moments in his life: Cf.; for more about the Methodist Church of Great Britain: Cf.

Reading Check


What are some of the central ideas of Methodism?

Contact info:
Shanahan: 610.518.1300 x4281
For Honors Business Economics and Honors World History II:
For World History 2:
Book references are available at:
HW or in-class work due the following day.
You may email to
1. In the textbook, review the six "Reading Check" questions in Ch. 10 Sec. 1; you do not need to answer them by writing out the answers but you want to be sure you understand the questions and answers. If there is any material that you are unsure of make sure we have a chance to talk, and accurately answer, the "Reading Check" questions throughout the week in class.

Honors Business Economics Chapter 1 Section 1, 17 September 2010

Current Events:

Chapter 1: What Is Economics?

Chapter Overview

Section 1: Scarcity and the Science of Economics

Economics is a social science that deals with the fundamental economic problem of scarcity—a condition caused by the combination of seemingly unlimited wants and limited resources. Because of this, people are forced to make choices and decisions about how they will use their resources. People have needs such as food, clothing, and shelter; people have wants, which are nonessential ways of expressing needs. The notion of TINSTAAFL, which stands for There Is No Such Thing As A Free Lunch, is often used to remind us that resources are scarce and that we must make careful economic decisions regarding WHAT, HOW, and FOR WHOM to produce. Other concepts relevant to economics are the four factors of production: land, capital, labor, and entrepreneurs. And the four key elements to this study are description, analysis, explanation, and prediction.

Definition of Economics

Definition of scarcity

The Factors of Production, p. 8

Graphic Organizer: Chapter 1, Section 1 - Review, The (4) Factors of Production, p. 8

p. 8: Descriptions of Land, Capital, Labor, and Entrepreneurs




Entrepreneurs, p. 9

Goods that are used to produce other goods or services are called economic resources (and are also known as inputs or factors of production). These resources are often categorized into the following groups:

1. Land,
2. Labor,
3. Capital, and
4. Entrepreneurial ability.

The category of "land" includes all natural resources. These natural resources include the land itself, as well as any minerals, oil deposits, timber, or water that exists on or below the ground. This category is sometimes described as including only the "free gifts of nature," those resources that exist independent of human action.

The labor input consists of the physical and intellectual services provided by human beings. The resource called "capital" consists of the machinery and equipment used to produce output.

This point requires an important, and to prevent confusion, distinction to be made.

Note that the use of the term "capital" differs from the everyday use of this term. Stocks, bonds, and other financial assets are not capital under this definition of the term.

However, in standard financial terminology, this is indeed what capital means.

Entrepreneurial ability refers to the ability to organize production and bear risks.

A good is said to be an economic good (also known as a scarce good) if the quantity of the good demanded exceeds the quantity supplied at a zero price. In other words, a good is an economic good if people want more of it than would be available if the good were available for free.

A good is said to be a free good if the quantity of the good supplied exceeds the quantity demanded at a zero price. In other words, a good is a free good if there is more than enough available for everyone even when the good is free. Economists argue that there are relatively few, if any, free goods.

An item is said to be an economic bad if people are willing to pay to avoid the item. Examples of economic "bads" include things like garbage, pollution, and illness.

The resource payment associated with each resource is listed in the table below:

Economic Resource Resource Payment
land rent
labor wages
capital interest
entrepreneurial ability profit

And, again here below:


Chapter 1 Section 2 Basic Economic Concepts

Overview: Section 2 Basic Economic Concepts

The concepts of goods, services, consumers, markets, factor markets, product markets, productivity, economic growth, and economic interdependence are explained and are linked in the circular flow diagram. Productivity is necessary for economic growth, and growth takes place when specialization and the division of labor are present. In addition, human capital, the sum of our skills, abilities, health, and motivations are other important components of growth.

Guide to Reading, p. 12

Section Preview

Content Vocabulary

Academic Vocabulary

Reading Strategy

Answer to Reading Strategy Graphic

Products in the News

Comic Books a Big Business

Goods, Services, and Consumers, p. 13


We were introduced to goods in the last section. A good is said to be an economic good (also known as a scarce good) if the quantity of the good demanded exceeds the quantity supplied at a zero price. In other words, a good is an economic good if people want more of it than would be available if the good were available for free.

A good is said to be a free good if the quantity of the good supplied exceeds the quantity demanded at a zero price. In other words, a good is a free good if there is more than enough available for everyone even when the good is free. Economists argue that there are relatively few, if any, free goods.



Reading Check


How are goods, services, and consumers related?

Value, Utility, and Wealth, p. 14

The Paradox of Value




Reading Check


How are value and utility related?

The Circular Flow of Economic Activity, p. 15

Circular flow model, 4:21
A brief video using the circular flow model to illustrate the basic nature of product markets and factor markets.

Factor Markets

Factor Markets, 3:01

The video is about factor markets. In economics factor markets are also termed as resource markets referring to the place where, the factors of production are bought and sold. The factors of production include land, labor, capital, raw materials and management. All the factors have a consideration and each factor's consideration is addressed in a differently.

Product Markets

Reading Check


What roles do factor markets and product markets play in the economy?

Productivity and Economic Growth, p. 16

Writers Talk Ross Gittins: Higher productivity, 3:45

Economics journalist Ross Gittins talks about his book Gittinomics and ways to create higher productivity.


Investing in Human Capital

Division of Labor and Specialization, p. 17

In The Wealth of Nations, Adam Smith argued that economic growth occurred as a result of specialization and division of labor. If each household produced every commodity it consumed, the total level of consumption and production in a society will be small. If each individual specializes in the productive activity at which they are "best," total output will be higher. Specialization provides such gains because it:

* allows individuals to specialize in those activities in which they are more talented,
* individuals become more proficient at a task that they perform repeatedly, and
* less time is lost switching from task to task.

Increased specialization by workers requires a growth in trade. Adam Smith argued that growing specialization and trade was the ultimate cause of economic growth.

Adam Smith and David Ricardo argued that similar benefits accrue from international specialization and trade. If each country specializes in the types of production at which they are best suited, the total amount of goods and services produced in the world economy will increase. Let's examine these arguments a bit more carefully.

There are two measures that are commonly used to determine whether an individual or a country is "best" at a particular activity: absolute advantage and comparative advantage. These two concepts are often confused. An individual (or country) possesses an absolute advantage in the production of a good if the individual (or country) can produce more than can other individuals (or countries). An individual (or country) possesses a comparative advantage in the production of a good if the individual (or country) can produce the good at the lowest opportunity cost.

Economic Interdependence

Let's examine an example illustrating the difference between these two concepts. Suppose that the U.S. and Japan only produced two goods: CD players and wheat. The diagram below represents production possibilities curves for these two countries. (These numbers are obviously hypothetical).

Notice that the U.S. has an absolute advantage in the production of each commodity. To determine who has a comparative advantage, though, it is necessary to compute the opportunity cost for each good. It is assumed that the production possibilities curve (PPC) is linear to simplify this discussion (we will talk about the PPC in greater detail in a subsequent lesson).

The opportunity cost of one unit of CD players in the U.S. is 2 units of wheat. In Japan, the opportunity cost of one unit of CD players is 4/3 of a unit of wheat. Thus, Japan possesses a comparative advantage in CD player production.

The U.S. however, has a comparative advantage in wheat production since the opportunity cost of a unit of wheat is 1/2 of a unit of CD players in the U.S., but is 3/4 of a unit of CD players in Japan.

If each country specializes in producing the good in which it possesses a comparative advantage, it can acquire the other good through trade at a cost that is less than the opportunity cost of production in the domestic economy. For example, suppose that the U.S. and Japan agree to trade one unit of CD players for 1.6 units of wheat. The U.S. gains from this trade because it can acquire a unit of CD players for 1.6 units of wheat, which is less than the opportunity cost of producing CD players domestically. Japan gains from this trade since it's able to trade one CD player for 1.6 units of wheat while it only cost Japan 4/3 of a unit of wheat to produce a unit of CD players.

If each country produces only those goods in which it possesses a comparative advantage, each good is produced in the global economy at the lowest opportunity cost. This results in an increase in the level of total output.

Reading Check


What role does specialization play in the productivity of an economy?

Profiles in Economics, p. 18

Adam Smith (1723-1790)
French thinkers known as physiocrats focused on economic reforms. Like the philosophes, physiocrats based their thinking on natural laws. The physiocrats claimed that their rational economic system was based on the natural laws of economics.

Physiocrats rejected mercantilism, which required government regulation of the economy to achieve a favorable balance of trade. Instead, they urged a policy of laissez faire (les ay fehr), allowing business to operate with little or no government interference. Physiocrats also supported free trade and opposed tariffs.

Scottish economist Adam Smith greatly admired the physiocrats. In his influential work The Wealth of Nations, he argued that the free market should be allowed to regulate business activity. Smith tried to show how manufacturing, trade, wages, profits, and economic growth were all linked to the market forces of supply and demand. Wherever there was a demand for goods or services, he said, suppliers would seek to meet that demand in order to gain profits. Smith was a strong supporter of laissez faire. However, he felt that government had a duty to protect society, administer justice, and provide public works. Adam Smith’s ideas would help to shape productive economies in the 1800s and 1900s.

Division of Labor

Smith, a Scottish economist, argued that economies function most efficiently and fairly when individuals are allowed to pursue their own interests.

One person may decide to be a baker, another a merchant. One person may choose to sell his land, another to farm it. But all of these private decisions, made by rational, self-interested individuals, Smith argued, combine to produce a healthy, growing economy.

Invisible Hand

The great threat to economic growth, Smith argued, was government intervention—the government telling people what to do would only muck up the works. Government intervention distorted the natural and rational exercise of free, prudent choice. When left to their own natural operation, the private decisions made by thousands of rational economic players were tied into prosperous harmony by the “invisible hand” of the market.

Wealth of Nations

If you haven't read his famous book, it's absolutely worth checking out, whether or not you consider yourself a disciple of the free market. The Wealth of Nations is, without a doubt, one of the most important books of all time. And the ideas it contained played a powerful role in shaping the development of American economic thought. The book is relevant it matters today what he wrote.

Adam Smith's metaphor of the invisible hand remains one of the most important and influential ideas in economics, even today. As Americans have recently grappled with questions about how government should and should not intervene in the economy, many have turned to Smith for guidance.

What would Adam Smith think about the stimulus bill? About universal government-organized health insurance? About bailouts for companies judged "too big to fail"?

Cf. Adam Smith,

In the Circular Flow, 2:56

A song/video made for a high school economics class. It was recorded by one person for all five parts using Audacity. The song is from the original "In the Still of the Night" recorded by the Five Satins and later covered by Boyz II Men.

Sometimes, a Song Says it Better: Billionaire, by Travis McCoy, 3:31

Travis wants to be a billionaire. Adam Smith would be proud.

Textbook site (and class resources below):

Economics: Principles and Practices

Economics Web Links

Games & Simulations

Stock Market Game (SMG)

"Student teams are $15 each."

Mankiw Macroeconomics Presidential Game

Please note: this game requires the Shockwave version 7.0 or higher: test page for Shockwave.

There is an abundance of economics resources for Mankiw (edition 5e) as well.

Textbook site:

Economics: Principles and Practices

Economics Web Links

Games & Simulations

National Geographic MapMachine and maps to illustrate areas.

Study-to-Go: download a portable version of your textbook-related materials onto your Palm or Pocket PC, including Self-Check Quizzes.


This Index page collects all of the stories that we have written about the nation’s economic and financial crisis.


Cf. Scarcity

Energy Crisis: Resource Scarcity, Oil Wars & Climate Change, 1:25:18

Participants: George Soros; Mary Kaldor; Yahia Said; Sir Nicholas Stern. Chaired by Howard Davies

Description: This event seeks to promote their political agenda and thinking about energy security, and marks the launch of the publication Oil Wars, edited by Mary Kaldor, Terry Karl and Yahia Said.

July 4, 2007 at the London School of Economics.

(Audio only unfortunately)


Email me at, or in a hard copy hand in.

1. Be sure to have read Ch. 1 Sec. 1 Scarcity and the Science of Economics, review the material just in case there is a a Quiz (hint, hint) next week.

Back to School Night

Dr. G. Mick Smith
The best way to reach me is through email; I am in three class rooms (seven locations in an eight period day and constantly moving); however, I check email twice daily at least.

Shanahan: 610.518.1300 x4281
Honors Business AP Economics and Honors World History II:

Honors World History II, Honors Business Economics


Each assessment is assigned to a category (ex Tests, Labs, Presentations, etc.) and the category is assigned a weight (ex. Tests - 40%, Presentations - 20%, etc.). Individual assessment weights are then automatically calculated by based on these category weights.

Tests 65%

HW & Daily Class Work 20%

Quizzes 15%

Tests are always scheduled, announced well in advance, and worth more points.

Homework & Daily in-class work is required. There is HW and Daily in-class work due every day. HW is due daily barring absence, and with your absence, HW is due the day you return.

If you are absent for a longer period simply inform me and we can make separate arrangements. HW is posted and available online even when you are absent.

Emailed HW and daily in-class assignments might be best, but it is not required if you do not have access to a computer. I am in seven places during our eight period day thus I am not tethered to a specific room. I am connected online most of the day so I generally will be available.

Class participation includes debate, discussion, reactions, games, and projects of various sorts, details will be provided as we come to these more involved assignments.

All written work follows the Honor Code stating:

This is my work and I have not cheated in any way.

Access to a bathroom during class time is a privilege, not a right, and of course it is necessary in case of an emergency. The admonition here is that you are to remain on task throughout the period. You should not have access to materials for other classes or other distractions in this class. I consider this behavior to be defiance and you will receive demerits.

Next, we will consider what endeavors you should strive for as a student. In short, your task as a student should be the (what was described by Sr. last year as Quadrant D) dedicated endeavors that Sr. reviewed at our Faculty Orientation this week to (they are listed in descending order):







You will realize that you have arrived as a student when you can apply yourself to real world, unpredictable situations. I am fond of saying that the old chaos is the new normal. In short, this is the unpredictable world that we are living in currently. Events are taking place rapidly, change is constant, and the challenges are enormous. Yet, this is an exciting time to be studying disciplines such as history or Economics for their practical application.

We will begin the class with other challenging, game-changing periods in history.