Chapter 2 Section 4 Socialism and Capitalism AND Production Possibilities Curve from Chapter 1

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Socialism  Government owns the major factors of production AND attempts to manage output and distribution of goods. Examples – North Korea and Cuba (best examples)

Karl Marx  Wrote the Communist Manifesto  Father of modern socialism  Capitalists (Business owners) exploited the proletariat (working class) and used them unfairly.  Believed proletariat would eventually rise up against the capitalists.

Communism  Idealized system with no need for a government. Socialism and Communism as Marx explained it are NOTHING like what they have become today. Marx believed the proletariat would come to control all of the factors of production.

Socialism ≠ Communism  Socialism = Economic System  Communism = Form of Gov’t

Supporters of Capitalism  Place high value of personal freedom and initiative.  High rate of growth in capitalist economies (See Picture)

Critics of Capitalism  Uneven Distribution of Wealth and can be unethical Controversial film director Michael Moore recently created a film called Capitalism: A Love Story.

Continued From Chapter 1

Resources available: Your business has between 10 pieces of paper to produce either paper airplanes or paper footballs. Your firm can produce 1 plane or 2 footballs with each sheet. What are your production possibilities? AirplanesFootballs A B C D E F G

Production Possibilities Curve  Graph showing the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time.