3.2 Markets: capitalism, power and inequalities

Subtopic 3.2 explores the complex and sometimes dark relationship between markets, capitalism, and eroding social and ecological systems. Capitalism is defined as an economic system focused on generating maximum profit for capital owners, where markets dominate as the primary provisioning institution. You’ll understand how capitalism developed through historical processes like enclosure and colonisation, supported by an emerging human-nature dualistic worldview.

The subtopic also explains the role of laws in enabling market activities, including the creation of trust and the reinforcement of power structures through private property rights and legal personhood. The subtopic critically examines market power, highlighting the various forms it can take, such as monopolies, and the strategies businesses use to enhance their power. It concludes by addressing the moral limits of markets, particularly how market activities can worsen economic inequalities and undermine key social values.

At the end of Subtopic 3.2 Markets: capitalism, power and inequality, you should be able to:

• define capitalism and distinguish capitalism from markets

• explain how capitalism developed through processes of enclosure and colonisation and the worldview of human-nature dualism

• discuss the positive and negative consequences of capitalism

• outline the role of economic narratives in supporting capitalism

• explain how laws support freedom in market exchanges and the importance of fairness for the rule of law

• discuss how private property rights enable market activities and how they can reinforce power and inequality

• discuss how legal personhood and limited liability enable market activities and how they can reinforce power and inequality

• define market power and describe various forms including monopoly, monopsony, oligopoly and oligopsony

• explain the strategies that businesses use to increase market power

• discuss the economic, social and ecological consequences of increased market power

• discuss the ethical issues involved with using markets as a provisioning institution, including the impact on economic inequality and the crowding out of important social values