COMMUNISM, SOCIALISM & CAPITALISM . AUGUST 2016

Why do we have economics (and economic philosophies)? BECAUSE SCARCITY EXISTS! Scarcity = unlimited wants but limited resources

One philosophy: CAPITALISM (in a nutshell) PRIVATE PROPERTY INDIVIDUAL OWNERSHIP FREE COMPETITION PROFIT MOTIVE 3

3 Basic Questions a Society Must Face

ADAM SMITH --a market economy idea-- "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."

Adam Smith (again) Every individual “intends only his own gain, and he is in this… led by an invisible hand… By pursuing his own interest he frequently promotes that of society…” Competition acts as an “invisible hand” that guides resources to their most productive uses. A truly competitive market – operating with a minimum of government intervention – would bring about the greatest good for society as a whole. Explain this idea of an invisible hand. Why did Smith’s ideas appeal to business owners?

A Picture of the Invisible Hand

SOCIALISM NAME A ‘CAPITALIST’ COUNTRY. IN WHAT WAYS IS IT SOCIALIST? Many different forms (hard to easily define) Could be worker-managed/owned, government-managed/owned NOT private ownership Viewed as temporary stage by Marxists/Leninists NAME A ‘CAPITALIST’ COUNTRY. IN WHAT WAYS IS IT SOCIALIST?

Identify any language in the Communist manifesto that you do not fully understand. Which of the following objectives stifles creativity and innovation in the economy?

COMMUNISM, SOCIALISM, CAPITALISM There is no “pure” country Most socialist country today? North Korea Most capitalist (‘economically free’) country? Hong Kong (Singapore 2nd) Source: Heritage Index of Economic Freedom -- http://www.heritage.org/index/ Didn’t actually say “most capitalist” Where do you think China fits?

China & Communism “When the Chinese go to Africa, they aren’t taking communism. They are taking the market economy in one of its wildest forms. We are not talking about the expansionist communism of the 1920s, 1930s, 1940s any longer, anywhere in the world.” Robert Service, Oxford Scholar & author of Comrades: A History of World Communism

COMMUNISM: THEORY V. PRACTICE (i. e. Marx’s vision v COMMUNISM: THEORY V. PRACTICE (i.e. Marx’s vision v. USSR/China/DPRK/Cuba/etc.) OWNERSHIP? PLANNING/CONTROLLING THE ECONOMY? ROLE OF GOVERNMENT? How would capitalists answer each?

What does this cartoon imply?

COMMUNIST COUNTRIES IN WORLD HISTORY (RED = STILL COMMUNIST) Still at it!... CHINA (Since Oct 1, 1949) CUBA (Since 1961) LAO PDR (Since 1975) *NORTH KOREA (Since 1948) VIETNAM(Since 1976) DPRK has actually officially distanced itself from ‘communism.’ It officially follows ‘Juche’ (ideology of self-reliance) since 1972 instead of Marxism-Leninism. 2009—constitution amended, removing the few references to communism. But…the state owns most everything

True?

What might the opposite look like? (a more favorable view for each)

DISADVANTAGES OF MARKET v. PLANNED?

DISADVANTAGES: FREE MARKET VS PLANNED ECONOMY (Source: Blink & Dorton, 2007: 19)