HOW HAS THE CONSTITUTION SHAPED THE ECONOMIC SYSTEM IN THE UNITED STATES?
National Council on Economic Education (New York, NY)
INTRODUCTION
Constitutions are economic documents as well as political documents. This is
certainly true of the Constitution of the United States. Our nation's founders
believed that economic freedom as well as political freedom are essential for
national prosperity and growth. Accordingly, they included numerous provisions
in the Constitution that sup-port and encourage the operation of a market economy.
Thus, as the basic "law of the land," the U.S Constitution defines
the essential features of our economy.
CONCEPTS
Private Property
Freedom of Enterprise and Choice
Motive of Self-interest
Competition
Markets and Prices
Limited Role of Government
OBJECTIVES
Describe the six basic characteristics of a market economy
Identify some provisions of the U.S Constitution that foster and support a market
economy
Match provisions in the Constitution with the basic characteristics of a market
economy
Contrast the economic provisions of the U.S. Constitution with the economic
provisions of the Constitution of the People's Republic of China
LESSON DESCRIPTION
Students provide their own examples of the six characteristics of a market economy
as they exist in the United States today. Then they see how the U.S. Constitution
supports those characteristics by reading relevant portions of the Constitution,
and matching these provisions with the six char-acteristics of a market economy.
The lesson con-cludes by having the students read and discuss relevant portions
of the Constitution of the People's Republic of China. They then write essays
contrasting the impact of the economic provisions of the two constitutions on
the characteristics of each nation's economy.
TIME REQUIRED
One class period.
MATERIALS
One copy for each student of Activity 1, "Characteristics of a Market Economy"
One copy for each student of Activity 2, "Economic Provisions in the U.S.
Constitution"
One copy for each student and a transparency of Activity 3, "Matching Provisions
of the U.S. Constitution with Basic Characteristics of a Market Economy"
One copy for each student of Activity 4, "Economic Provisions in the Constitution
of The People's Republic of China"
PROCEDURE
1. Distribute copies of Activity 1. Explain the meaning of each characteristic
with an example, and then elicit additional examples from the class for each
characteristic.
2. Explain to the class that the U.S. Constitu-tion is an economic document as well as a politi-cal one. Distribute copies of Activity 2. Discuss the selected excerpts with the class, making sure the students understand the meaning of each by asking students to put them in their own terms.
3. Distribute copies of Activity 3. Display the transparency of Activity 3 for discussion and summary purposes. Divide the class into six groups by market economy characteristics. Have each group discuss the potential matches and come to a consensus.
4. Record the matches on the overhead display, eliciting discussion and agreement from the class as you do so, and reinforce the idea that the founders intended to have the Constitution protect and support a market economy.
5. Read to students The Preamble to the Constitution. We the people of the
United States, in order to form a more perfect Union, establish justice, insure
domestic tranquility, provide for the common defense, promote the general welfare,
and secure the blessings of liberty to ourselves and our posterity, do ordain
and establish this Constitution for the United States of America. Write the
phrase "promote the general welfare" on the chalkboard. Explain how
this phrase has been used to justify government intervention in our market economy,
for example: minimum wage laws, social security, unemployment compensation,
and occupational safety regulations.
CLOSURE
Distribute copies of Activity 4, "Economic Provisions in the Constitution of The People's Republic of China." After the students have read the copy, discuss with them how each economic provision in this document defines the economic role the government in China will play. As an out-of-class assignment, have each student write an essay explaining how the differing provisions in the two nation's constitutions can and have resulted in different types of economic freedoms and systems.
UNIT ONE: LESSON ONE
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ACTIVITY 1
CHARACTERISTICS OF A MARKET ECONOMY
PRIVATE PROPERTY
Labor resources, natural resources, capital resources (e.g., equipment and buildings),
and the goods and services produced in the economy are largely owned by private
individuals and private institutions rather than by government. This private
ownership combined with the freedom to negotiate legally binding contracts permits
people, within very broad limits, to obtain and use resources as they choose.
FREEDOM OF ENTERPRISE AND CHOICE
Private entrepreneurs are free to obtain and organize resources in the production
of goods and services and to sell them in markets of their choices. Consumers
are at liberty to buy that collection of goods and services that best satisfies
their economic wants. Workers are free to seek any jobs for which they are qualified.
MOTIVE OF SELF-INTEREST
The "Invisible Hand" that is the driving force in a market economy
is each individual promoting his or her self-interest. Consumers aim to get
the greatest satisfaction from their budgets; entrepreneurs try to achieve the
highest profits for their firms; workers want the highest possible wages and
salaries; and owners of property resources attempt to get the highest possible
prices from the rent and sale of their resources.
COMPETITION
Economic rivalry means that buyers and sellers are free to enter or leave any
market and that there are buyers and sellers acting independently in the marketplace.
It is competition, not government regulation, that diffuses economic power and
limits the potential abuse of that power by one economic unit against another
as each attempts to further its own self-interest.
SYSTEM OF MARKETS AND PRICES
Markets are the basic coordinating mechanisms in our type of economy, not central
planning by government. A market brings buyers and sellers of a particular good
or service into contact with one another. The preferences of sellers and buyers
are registered on the supply and demand sides of various markets, and the outcome
of these choices is a system of product and resource prices. These prices are
guideposts on which participants in markets make and revise their free choices
in furthering their self-interests.
LIMITED GOVERNMENT
A competitive market economy promotes the efficient use of its resources. As
a self-regulating and self-adjusting economy, no significant economic role for
government is necessary. However, a number of limitations and undesirable outcomes
associated with the market system result in an active, but limited economic
role for government.
ACTIVITY 2
COMMERCE CLAUSE
Article I, Section 8 states that Congress shall have the power "To regulate
Commerce with foreign Nations, and among the several States, and with the Indian
Tribes;..."
COINAGE CLAUSES
Article I, Section 8 states that Congress shall have the power "To coin
Money, regulate the value thereof, ..." and "To provide for the Punishment
of counterfeiting the Securities and current Coin of the United States;..."
Article I, Section 10 gives Congress this power exclusively by stating that
"No State shall...coin Money;..."
COPYRIGHT CLAUSES
Article I, Section 8 states that Congress shall have the power "To promote
the Progress of Science and useful Arts, by securing for limited Times to Authors
and Inventors the exclusive Right to their respective Writing and Discoveries;..."
CONTRACT CLAUSES
Article I, Section 9 states that "No Bill of Attainder or ex post facto
Law shall be passed..." by Congress. Article I, Section 10 states that
"No state shall...pass any Bill of Attainder, ex post facto Law, or Law
impairing the Obligations of Contracts,..."
EXPORT CLAUSES
Article I, Section 9 states that "No Tax or Duty shall be laid on Articles
exported from any State...", and Article I, Section 10 states that "
No State shall without the Consent of the Congress, lay any Imposts or Duties
on Imports or Exports,..."
SEARCHES AND SEIZURES
Amendment IV states that "The right of the people to be secure in their
persons, houses, papers, and effects, against unreasonable searches and seizures,
shall not be violated,..."
DUE PROCESS
Amendment V states that "No person shall...be deprived of life, liberty,
or property, without due process of the law;..." and Amendment XIV, Section
1 states "nor shall any State deprive any person of life, liberty, or property,
without due process of law;..."
RESERVED RIGHTS AND POWERS
Amendment IX states that "The enumeration in the Constitution, of certain
rights, shall not be construed to deny or disparage others retained by the people."
and Amendment X states "The powers not delegated to the United States by
the Constitution, nor prohibited by it to the States, are reserved to the States
respectively, or to the people.
ECONOMIC PROVISIONS IN THE CONSTITUTION OF THE PEOPLE'S REPUBLIC OF CHINA
PREAMBLE
"... the fundamental task of the state is, step by step, to bring about
the socialist industrialization of the country and step by step, to accomplish
the socialist transformation of agriculture, handicrafts and capitalist industry
and commerce. ..."
and
"... the necessary conditions have been created for planned economic construction
and gradual transition to socialism."
CHAPTER ONE
General Principles
Art. 5 "...basic forms of ownership of means of production exists in the
People's Republic of China: state ownership...; co-operative ownership, that
is a collective ownership..."
Art. 6 "The state sector of the economy is a socialist sector,... It is
the leading force in the national economy and the material basis on which the
state carries out socialist transformation. The state ensures priority for the
development of the state sector of the economy."
Art. 8 "... the policy of the state towards rich-peasant economy is to
restrict and gradually eliminate it."
Art.10 "...the policy of the state towards capitalist industry and commerce
is to use, restrict and transform them...gradually replacing capitalist ownership
by the whole people;..."
Art.13 " The state may... buy, requisition or nationalize land and other
means of production..."
Art.14 "The state forbids any person to use his private property to the
detriment of the public interest."
Art. 15 "By economic planning, the state directs the growth and transformation
of the national economy..."
Art. 16 "Work is a matter of honor for every citizen of the People's Republic
of China who is able to work."
CHAPTER TWO
The State Structure
Section I. The National People's Congress
Art. 27 "The national People's Congress exercises the following functions
and powers:
...(9) to decide on the national economic plans;..."
Section III. The State Council
Art. 49 "The State Council exercises the following functions and powers:
...(7) to put into effect the national economic plans...
...(8) to control foreign and domestic trade;..."
CHAPTER THREE
Fundamental Rights and Duties of CitizensArt. 91 "Citizens of the People's
Republic of China have the right to work. To guarantee enjoyment of this right,
the state, by planned development of the national economy, gradually creates
more employment, and better working conditions and wages."
What surprised you most
from comparing the Constitutions of the U.S. and China? How might you use this
lesson in teaching about civics? Write about this activity in your Civics Journal.