LAND
Land represents the physical natural resources that the land possesses, its quality and its quantity. Land can be the dirt,
the trees, the raw minerals, the water, or the food grown. Land earns rent in economic terms. All states possess “land.”
LAND EXERCISE
In economic terms, describe the “land” of nomadic and prehistoric peoples, the river valley civilizations, the classical civilizations,
and all major civilizations in the Post-Classical to Contemporary Ages.
LABOR
Labor represents the number of people in a society who can do the physical labor. Labor is literally muscle power. If
society uses mostly manpower to produce its needs, this is called labor intensive. Labor earns wages.
LABOR EXERCISE
In the economic terms of labor, describe “work” in each of the historic periods and major civilizations.
CAPITAL
Capital is not money. It represents the tools that societies use to produce their needs. All societies have capital as well as labor. If capital is
used more extensively in a society than is physical labor, the society is capital intensive. Capital earns interest.
CAPITAL EXTENSION
Why would a person or a businessman invest in capital? How?
ENTREPRENEURSHIP
Entrepreneurship represents the economic equivalent of brain power and tendency to innovate. Not all societies encourage
entrepreneurship, while others reward it. This is sometimes called intellectual capital and earns profit! Trade is entrpreneurial.
EXERCISE
Entrepreneurship involves innovation and invention! Why do ancient societies not like innovation? How do they
discourage it? How do modern societies reward innovation?
TRADITIONAL SYSTEMS
In a traditional economic system, people make decisions based on their traditions and how earlier generations made decisions. Most
often the elderly and clans make decisions for the good of those who constitute the “group.”
In a traditional economic system, land is the major input. What you do not have, you do not have. Economies are subsistence, work is
labor intensive - more work means more produce. Capital is simple or animal in nature and entrepreneurs are considered suspect.
TRADITIONAL SOCIETIES
What historical societies are considered traditional? What aspects of modern society or states are considered traditional?
When economic systems break down, why do they become traditional?
COMMAND ECONOMY
In a command economy, decisions are made largely by an authority such as an aristocrat or a central government planning authority.
It can be exercised in democratic or authoritarian societies. Quotas and restrictions are common.
What ancient economies were largely command? Why might a hydraulic society (one dependant on control of water and irrigation)
be considered command? What 20th century societies are or were command economies?
Why does a war-time economy have to be command? Why would an economic crisis warrant a command economy? Can you name
some historical examples? Was mercantilism a command economy?