Capitalism

1._______________________________ carry on the production and exchange of goods and services through a complex network of prices and markets. Although rooted in antiquity, capitalism is primarily European in its origins; it evolved through a number of stages, reaching its zenith in the 19th century.

2. _______________________________, capitalism spread throughout the world, largely unchallenged as the dominant economic and social system until World War I ushered in modern communism (or Marxism) as a vigorous and hostile competing system.

3. _______________________________ in the mid-19th century by Karl Marx, the founder of communism. Free enterprise and market system are terms also frequently employed to describe modern non-Communist economies.

4. _______________________________ is used to designate the kind of economic system most often found in Western nations.

5. _______________________________ is the Scottish philosopher Adam Smith, who first set forth the essential economic principles that undergird this system. In his classic An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Smith sought to show how it was possible to pursue private gain in ways that would further not just the interests of the individual but those of society as a whole.

6. _______________________________ maximum production of the things that people want. In a now famous phrase, Smith said that the combination of self-interest, private property, and competition among sellers in markets will lead producers “as by an invisible hand” to an end that they did not intend, namely, the well-being of society.

Exercise 6. Eight words can be formed from the basic word capital. This table shows how to do it. Make a list of the words, and put each word in its suitable place in the sentences below.

stem	suffix
capital	1	2
	ist
	ism
	ist	ic
	ize	ation
		d
	ly

1. An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market is called _________.

2. A town or city that is the official seat of government in a political entity, such as a state or nation, is ________.

3. An investor of capital in business, especially one having a major financial interest in an important enterprise is called _________.

4. To use as or convert into capital means _______

5. You understand every word I mean, so you understand me _________.

6. Wealth in the form of money or property, used or accumulated in a business by a person, partnership, or corporation is called _________.

7. An important figure in the ___________ system began to emerge: the entrepreneur, or risk taker.

Exercise 7. Circle the “odd one out” in each of these groups of words.

1. a) property b) landowner c) ownership d) authority

2. a) USA b) marxist c) communism d) central planning

3. a) salary b) pay c) earn d) income

4. a) staff b) personnel c) product d) workforce

5. a) public b) private c) enterprise d) capitalistic

6. a) target b) aim c) reach d) objective

7. a) firm b) company c) enterprise d) owner

8. a) client b) customer c) consumer d) employee

9. a) rise b) fluctuate c) charge d) plan

10. a) food b) cinema c) clothes d) shelter

Exercise 8. Write down in your notebooks and complete the wordmap with the following words and phrases given below.

• economic system of Cuba

• capitalistic

• property can be owned by individual citizens

• in theory all property should belong to the state

• communistic

• mixed

• based on the principles of Karl Marx

• In the public sector are the nationalized industries like coal and steel, in the private sector are the majority of the nation’s industries, both large and small.

• economic system of America

• based on private enterprise

• clear distinction between the public sector and the private sector of economy

• planned

• economic system of Great Britain

• form of capital is surplus income available for investment in new business activities

• the prices of goods and services are related to supply and demand

• emphasis is collective and not individual

• based on private supplies of capital

• private property and private enterprise are reduced to a minimum

• in practice, however, the citizens are permitted to have personal effects

• State organizes the whole economic effort of the nation

Exercise 9. Read the text and fill in the gaps with words from the box: