HIS 406: Capitalism and Its Critics
Fall 2011
Ms. Foley
A and F Formats
Phone: x4357, Email: mfoley@exeter.edu
Big Issues and Essential Questions for the Course:
Throughout the course we will concentrate on the following big issues and essential questions. At any
point during the course we should be able to look back at these and see our progression of understanding
these issues. Anytime you are writing an essay or considering discussion questions, you should be able to
refer to these for a bit of guidance. It is my goal that by the end of the course we will all have reached a
higher understanding of these issues and questions.
1. The way we produce and distribute our resources is a choice.
Who is involved in making this choice?
Is one choice more “fair” than another? How do we view equity in this choice?
2. The government may or may not be tied to that choice.
Why would a society want its government to intervene in the economy?
Does an economy “work better” with or without government involvement?
What do we mean by government involvement in the economy?
3. The role of an individual, a firm, or a country’s economic responsibility depends upon your view of
economic equity.
What constitutes “economic liberty” and what are the trade-offs involved in upholding liberty as a value?
Is redistribution desirable? Is regulation desirable?
Important Details:
 You will need to purchase one book for this course:
Heilbroner, Robert L. The Worldly Philosophers. 7th ed. (WP in this syllabus)
Also, we have made a course reader with most of the handouts for this course. We will provide that for you.
 You are expected to come to class having thoroughly read the assignment and with your own
questions for discussion. When I have listed questions on the syllabus, be sure to consider them as you do
the reading. You will be well-served to take notes on the reading and discussions as you go. Knowing the
basics will allow us to have more intelligent discussions. Always mark up your text or handout!
 This course will always meet at least three days a week. Please see the calendar addendum for
elaboration. This is subject to change. That means that you should keep the fourth format available to use
during short weeks or when we need more time to cover a topic.
 Your grade will be determined from a variety of assessments. You will have approximately three
major assessments which will constitute fifty percent of your final grade. Class participation, along with
some smaller writing assignments and blog entries will make up fifty percent of your grade. Class
participation includes quality of contributions, listening, preparedness, and frequency. If you are ever
curious about your grade, or, particularly, want to talk about how things are going in terms of class
participation, please take a few minutes to meet with me.

IF YOU MISS A CLASS please get in touch with me as soon as is reasonable for you, but before the
next class. You may need handouts or background information before the next class. Call me at x4357.
 Feel free to call me any evening up until 9:30 p.m. if you have any questions. If you need to see me in
person, I live on the 1st floor of Cilley Hall.
Class Assignments and Daily Questions:
The Basics of the Economic Problem and the arrival of a Market Economy
1.
Introduction: Annapurna’s Dilemma
2. The Economic Problem
Read: Packet – Heilbroner’s MES, chapter 1
Blog A
What is the “economic problem?” Is the “economic problem” different with economies of differing sizes
and degrees of affluence? How do traditional, command, and market economies solve the “economic
problem?”
3. The Medieval Economy
Read: Packet – Heilbroner’s MES, chapter 2 and Davies “Usury”
Blog B
Characterize the economies of Antiquity and Medieval Europe. How were decisions about production and
distribution made under feudalism? How effectively did the feudal economy meet the needs of society?
4. The Emergence of Market Society
Read: Packet – Heilbroner’s MES, chapter 3 (to page 51 only) and Kemper Fullerton “Calvinism and
Capitalism”
Which of Heilbroner’s forces of change were the largest contributing factors? Did values alter the
institutions or vice versa? How influential, in your assessment of the forces of change, is Fullerton’s view
on the role of Calvinism?
Bring to class: One page essay answering Of the reasons given in the readings, which seems to be the
most influential in spurring the beginning of a market economy in Europe?
5. Adam Smith: Moral Philosopher
Blog C
Read: WP, chapter 3, pp 42-top 49 and Packet - Smith, "Theory of Moral Sentiments"
Do you agree that human beings have a capacity for, and inclination towards, sympathy? How problematic
are ambition, the distinction of ranks, and the tendency to admire the rich and look down on the poor?
How does Smith explain the paradox that individual greed and self-interested behavior promotes the
collective good?
6. Adam Smith: Economist
Blog A
Read WP, Chapter 3, p. 49-74 (optional – read Secondi handout in the packet “Supply and Demand”)
In what ways was Wealth of Nations a revolutionary book for its time? How does it explain economic
growth? What role does the market and the invisible hand play? Will an economic system characterized by
the pin factory growth mechanism be equal or unequal? Why? How do you understand the tension between
the pin factory and the invisible hand?
7. Adam Smith: Market conditions & the Role of Government
Blog B
Read: Packet - Smith “Duties of the Sovereign” and McMillan “The Only Natural Economy”
What are the essential components in a well-designed market? Why does McMillan emphasize property
rights? Where/When are markets un-useful?
8. Assessing Markets
Blog C
Read: Packet - McMillan “He Who Can’t Pay Dies,” and Gates “Making Capitalism More Creative”
How have market incentives helped getting medicine to people who are ill? How have they hindered
getting medicine to people who are ill?
9. FIRST ESSAY DRAFT DUE – In class workshop – Details to come – essay topic focuses on Smith’s
“Duties of the Sovereign”
10. FIRST ESSAY FINAL VERSION DUE - Details on handing in will follow. Release time – class will
not meet.
HIS 406
Foley
Syllabus, part II
11. Thomas Malthus: Population, Food and Natural Scarcity
Read: WP, chapter 4 up to middle of page 94, but skip 79-middle 88. Also, Malthus and McNeill
handouts
What limits does Malthus see to growth? How does his view differ from Adam Smith's growth model? Do
the dynamics of population growth and hunger still apply today? How does population relate to economic
development? Could we improve technologies and thus, avoid a resource trap?
12. What was the source of the Industrial Revolution?
Blog Group A
Read: Handouts – New Republic Review of Mokyr’s Enlightened Economy and VOX blog posting by
Robert Allen
Was the Industrial Revolution prompted by a discrete jump in the pace of technical change?
Were exceptional individuals key to the Industrial Revolution? Were exceptional ideas key to the Industrial
Revolution? What is the importance of demand ? What lessons can be drawn for developing countries
today?
Also – by Tuesday evening (10/04) please email Ms. Foley with a response to three
questions:
1. How am I (you - the student) doing in class discussion?
2. How is the class as a whole doing with class discussion?
3. What can Ms. Foley do to help improve discussions?
I will compile the responses related to the class as a whole (with no names attached) and we will have a
METIC also this week.
13. The Utopian Socialists
Blog Group B
Read: WP Chapter Five until middle of p. 126, and Buchholz handout. Pay attention when reading WP to
pick out the ideas of the different authors for social reform from their biographical details.
Which of the utopians appeals to you most and why? How, if at all, have the ideas of these pioneers
become part of our society? How radical of a wealth re-distribution policy is desirable in society? What are
the links between re-distribution and its effects on production? Bentham’s utilitarianism is considered by
some to be the fundamental philosophy of economics? What are its limits and strengths and how does it
relate to incentives?
14.Will Globalization Make you Happy?
Blog Group C
Read: packet - Wright, “Will Globalization Make You Happy?” and Deaton, “Income, Health…”
Is globalization good for the poor but bad for the rich? Or, is it bad for the poor and good for the rich? Why
does increasing income bring “declining utilitarian bang per buck?” according to Wright? What are the
implications of Deaton’s research? Also…METIC in class today.
15. Karl Marx and Friedrich Engels: The Communist Manifesto
Read: “The Communist Manifesto” in the readings book; first make your notes including notes on the
questions asked in the first set of questions below, then read WP, chapter 6 pages 139 – top 148 and make
notes on the first set of questions below:
Take notes on this: What is your understanding of the concepts of dialectical materialism, the base, and
the superstructure?
How do Marx and Engels understand the process of historical development from a pre-market to a market
economy that we have studied so far in the course? Assess the importance of political organization and
political struggle as well as the importance of economic change. What is Marx's attitude to private property
in the Communist Manifesto and how does he respond to criticism that the abolition of property will lead to
a problem in incentive to work?
16. Karl Marx, Part II: Capital
ALL BLOG on your thoughts about last discussion by 10 p.m. after class 15, read each other’s entries
Read: WP, the rest of chapter 6, concentrate especially on bottom of page 154 onwards. The early part of
the chapter gives biographical information about Marx and Engels and also some information about their
historical context.
Why did Marx maintain that capitalism would inevitably collapse? List the so-called “internal
contradictions” of capitalism that Marx had in mind. Why has capitalism not collapsed as Marx had
predicted?
Section III: 20th Century Economies: Perspectives and Conflicts
17. How Relevant is Marx Today?
Blog Group A
Read: in readings book: Heilbroner, “Capitalism and Socialism;” Galbraith “Have Capitalism and
Socialism Converged?” and Cassidy, “Return of Karl Marx”
Is it fair to conclude that capitalism has triumphed, and that Marxism has failed as a means of organizing
society? What does Heilbroner mean when he says that “while capitalism’s internal economic
contradictions are not what will destroy it, its internal cultural contradictions may”? What features have
Marx’s critique of capitalism proved valid? Which of these views seems to best capture the essential
qualities of capitalism today? TAKE NOTES ON THIS.
18. Communism: 20th Century Implementation
Blog Group B
Read: in readings book: Frieden Chapter 14 "Socialism in Many Countries" EXCERPTS,
separate handout (not in readings book): Viksnins
What particular strategies did the USSR and China pursue to advance their predominantly rural societies
through industrialization to Communism? What aspects of these strategies are consistent with Marx's
analysis and what aspects contradict Marx? What can we learn from the political experiments in Socialist
countries about the balance between command and market as mechanisms for social organization?
19. The Contemporary Proletariat? Low Wage Workers Today
Read: in readings book: Ehrenreich chapter from Nickel and Dimed
Blog Group C
What does Ehrenreich see as the primary issues for low-wage earners? To what extent is low income the
main factor, or, if writing is "ego food" for Ehrenrich (p.106), what causes "ego starvation" for low income
workers? What policy responses, if any, are possible that would substantially improve the lot of low paid
workers? To what extent is command necessary to implement any such policy responses and at what level?
Are the issues facing low-paid workers prevented from becoming too severe by the mechanisms of tradition
and market?
20. American Industrial Revolution: The Change in Market Structure and Anti-Trust Mvmt
Read: handouts The Sherman Act & Peritz "Sherman Anti-Trust Debates
How would you characterize the nature of competition in the late 19 th century American economy?
Distinguish between classical and “cutthroat” competition. What type of corporate conduct did the
Sherman Act outlaw? What were the weaknesses of the Act? Consider the Standard Oil case. Was the
government’s breakup of the Standard Oil Company a good or bad decision?
21. Monopoly case study: Google
Read: handouts, Wall Street Journal, Politico articles (not in the binder)
Additional resources at http://www.c-span.org/Events/Google-Exec-Testifies-BeforeCongress/10737424248-1/
Should the government intervene in Google based upon antitrust principles? What would be the appropriate
remedy?
22. Second essay due – Friday, October 28 for F format OR Saturday, October 29 for A format (release
time, no class)
HIS 406
Foley
Syllabus, part III
Twentieth Century Economic Issues
23.
The 1920’s U.S. Economy and the Causes of the Great Depression
Read: packet - Bernanke
To what extent did the end of World War I and the Peace of Paris contribute to the beginnings of the Great
Depression? Characterize the US economy in the 1920’s. Was it fundamentally sound or are there areas of
concern? What was the role of the stock market crash in contributing to the Great Depression?
24.
Conflicting Interpretations of the Depression: Friedman vs. Keynes
Blog A
Read: Handouts - Friedman, “Anatomy of a Crisis”; Shannon, “Monetarist vs. Keynesian App….”
What is Friedman’s explanation for the causes of the Depression? How did the Federal Reserve contribute
to this downward spiral? To what extent was the Gold Standard to blame for the propagation and
prolongation of the Great Depression? According to Friedman, what policies should the Fed, and the
private banking community, have carried out following the crash? Whose explanation for the causes of the
Depression do you find the most persuasive?
25.
John Maynard Keynes
Read: WP, chapter 9
ALL BLOG
Pay attention to Keynes’s view of investment. How does Keynes view the workings of the market
differently than Smith or Friedman? Does he believe that capitalism possesses structural flaws? What
advice does he offer about how and when the government should intervene in the economy?
Blog (1 paragraph): Were Keynes’s policies socialistic?
26.
Keynes, Social Democracy and the Origins of the Welfare State
Blog B
Read: handouts - Frieden Chapter 10 "Building a Social Democracy,” Keynes’s letter to FDR, Galbraith,
excerpts from The Good Society. This is a long reading assignment so plan ahead.
What are the key components of social democracy in the 1930s? What were the mains causes of the shift
towards social democracy in Europe and US? Assess Keynes' role in this process. To what extent can
social democracy be understood as either an implementation of Marx's ideas or a defense against them?
What are the differences between the US New Deal and the Swedish social democratic model?
27.
Friedrich Hayek and Libertarianism
Blog C
Read: handout - Hayek, "Road to Serfdom"; additional handout (separate PDF) “Libertarian Manifesto”
How do these texts challenge those who would support a more interventionist government? What do you
think Hayek would say about Keynesian "pump-priming?" Why does "choice" play such a critical role for
Hayek and for libertarians?
28.
2008 Financial Crisis, Part I.
Blog A
Read handouts: Janet Yellen, “Subprime Mortgages,” Alan Blinder, “Six Fingers of Blame in the Mortgage
Mess;” Doug Diamond and Anil Kashyap, “The F.A.Q.’s of Lehman and A.I.G.;” Barry Eichengreen,
“Anatomy of an Economic Crisis;” Ben Bernanke, “Causes of the Recent Financial and Economic Crisis.”
What was the role of subprime mortgages in causing the crisis? Which of Blinder’s “six fingers of blame”
strikes you as most important for understanding the crisis? Why did the Fed rescue Bear Stearns and A.I.G.
but let Lehman Brothers fail? To what extent did global events contribute to the crisis? Did the
“vulnerabilities” in the private sector play a greater role than the problems in the public sector?
29.
2008 Financial crisis, Part II.
Blog B
Read handouts: “Financial Regulation: The Hope and the Worry;” Brady Dennis and Alberto Cuadra,
“Reinventing Financial Regulation;” Damian Paletta and Aaron Lucchetti, “Law Remakes U.S. Financial
Landscape;” Binyamin Appelbaum and David M. Herszenhorn, “Financial Overhaul Signals Shift on
Deregulation;” “The Uncertainty Principle;” Neal Gabler, “Can’t Stop the Greed;” “So Much for the
Volcker Rule;” Christopher J. Dodd, “Five Myths About Dodd-Frank.”
How effectively do the provisions of the Dodd-Frank Act protect consumers? Do you expect that the
measures designed to deal with “too big to fail” will get the job done? Do you agree with The Wall Street
Journal that “the biggest financial players aren’t being punished or reined in”? Do you agree with Gabler
that the only way to stop greed on Wall Street is to raise marginal tax rates and capital gains taxes? What
have we learned about Dodd-Frank in the last year and a half?
30.
Occupy Wall St.
Blog C
Read handouts: Luigi Zingales, “Capitalism After the Crisis;” Dani Rodrik, “Coming soon – Capitalism
3.0;” James K. Galbraith, “Plan;” Frank Rich, “The Class War Has Begun;” “Rage Against the Machine.”
What are the unique features of American capitalism according to Zingales? Do you agree that “true
capitalism lacks a strong lobby”? Should we abandon “the notion that any firm is too big to fail” as
Zingales suggests? Why does Rodrik believe that globalization is responsible for bringing down the mixedeconomy model? Do you agree? Is planning what the U.S. economy needs, as Galbraith argues? Does
Occupy Wall Street represent the beginning of the end for capitalism? Or does it just serve as an
opportunity for people to vent their frustrations—with no constructive goals?
31.
Final project release time
32.
FINAL DUE: Class will meet briefly; details TBA. Final project due by end of the exam block.