Economic Systems & Ideologies

What is economic system? Has to do with jobs, money, products, and services What kind of economic system a country has depends on who makes the decisions about jobs, money, products, and services.

FOCUS VIDEO Economic_Systems__Regulating_the_Exchange_of_Goods_and_Services.asf

Types of Economies Traditional- Relies on habit, ritual, & the family. Market- Individuals own the factors of production. Command- Government owns the factors of production. Mixed- a mixture of 2 or 3 of the above types = the “isms” Types of Economies Capitalism, Communism, Socialism Video Link – 3:00 Min

Activity The government keeps the prices of foods low so that children can get food that will be beneficial to them. Command

Their parents buy most of the groceries from the government stores, but they may sell other crops or products they produce in the market place. Market

Their parents buy most of the groceries from the government stores, but they may sell other crops or products they produce in the market place. Market

Their parents buy most of the groceries from the government stores, but they may sell other crops or products they produce in the market place. Mixed

For many years the city had a good automobile industry For many years the city had a good automobile industry. The owners of the company did many studies to find out what people wanted. Then they produced what they believed customers would buy. Market

HISTORICAL ORIGINS OF ECONOMIC SYSTEMS

Background Global trade increases due to Columbian Exchange & Industrial Revolution Gap between rich and poor widens Business leaders want governments to stay out of economic affairs Reformers believe governments should improve conditions for the poor

Abuses of Industrial Revolution Unequal distribution of Wealth Long Hours Unsafe Working Conditions No Worker’s Compensation

Socialism An economic system in which the factors of production are owned by the public. All major industries owned by the government.

Modern Examples: France, Canada and Britain Basic Ideas: All major means of production are owned by the government and run for the good of the people Small businesses can be privately owned but major businesses are owned by the government Mixed Economy Modern Examples: France, Canada and Britain Socialism Pure Socialism You have two cows. The government takes them and puts them in a barn with everyone else’s cows. You have to take care of all the cows. The government gives you all the milk you need.

Socialism Statements Free medical care, but you are not allowed to pick your doctor Leaders at all levels of government are subject to recall and they are only paid an average workers wage Prices of products are low, but you will have very few choices of different products Bureaucratic Socialism Your cows are cared for by ex-chicken farmers. You have to take care of the chickens the government took from the chicken farmers. The government gives you as much milk and eggs the regulations say you should need.

Capitalism An economic system based on individuals owning the factors of production and all major industries. Private property, profit motive

When:During the Age of Exploration Reason:Began as a result of the Columbian Exchange Who: Adam Smith – first to describe the basic ideas in Wealth of Nations Type: Market Economy (Mixed) Modern Examples: USA and Japan Capitalism Pure Capitalism You have two cows. You sell one and buy a bull.

Basic Ideas Law of Supply and Demand-real price is set by consumers Individuals own the factors of production Law of Competition – to sell you must reduce price or raise quality when there is competition Laissez-faire Capitalism – “hands-off” or let the people do as they choose Private ownership of property, industry, and business. People not the government answer the four basic economic questions No/Few government regulations Capitalism Capitalism You don’t have any cows. The bank will not lend you money to buy cows, because you don’t have any cows to put up as collateral.

Capitalism Statements You pay for all of your medical care, but sometimes you can pick whatever doctor you want to see You can open your own business, but there is no guaranteed that it will succeed and you must pay for all marketing costs You have multiple options of all types of products but prices may be a bit higher

Communism An economic system based on all major industry and factors of production being owned by the government. Private property DOES NOT exist, and all goods and services are shared equally.

When: Begins in 1800 Reason: The reforms of the Industrial Revolution sparked Socialist Karl Marx to evaluate the inequalities that were going on. Who: The Communist Manifesto – Marx argued that the “Haves” (people with money) were taking advantage of the “Have-nots” (the working class). He felt that eventually the workers would revolt and take control of the factories. Communism Pure Communism You have two cows. Your neighbors help you take care of them, and you all share the milk.

Communism Basic Ideas All Factors of production owned by the people No private property All goods and services are shared by the people Extreme government regulations Command Economy Modern Examples: China and North Korea Communism Real World Communism You share two cows with your neighbors. You and your neighbors bicker about who has the most “ability” and who has the most “need”. Meanwhile, no one works, no one gets any milk, and the cows drop dead of starvation.

World Ideologies As Explained By Reference to Cows Russian Communism - You have two cows. You have to take care of them, but the government takes all the milk. You steal back as much milk as you can and sell it on the black market. Perestroika - You have two cows. You have to take care of them, but the Mafia takes all the milk. You steal back as much milk as you can and sell it on the “free” market. Cambodian Communism - You have two cows. The government takes both and shoots you.

Communism Statements You are guaranteed a job by the government that will pay you enough to provide for your family The house you live in will be provided to you, however you might not live where you want to You don’t have to go to church on Sunday’s or any other day of the week, as you are not allowed to have a religion

Economic Systems Poster In your groups, you will do the following: Create colored poster of your economic system that includes: Founder / Person most associated with the system Definition of the economic system / Basic ideas behind it Type of economy (mixed, market, command, traditional) Modern Examples (country/countries) Picture/Illustration representing your economic system Slogan representing your economic system Economic Systems Poster Be creative and appropriate

World Ideologies As Explained By Reference to Cows  Feudalism - You have two cows. Your lord takes some of the milk. Representative Democracy - You have two cows. Your neighbors pick someone to tell you who gets the milk. British Democracy - You have two cows. You feed them sheeps’ brains and they go mad. The government doesn’t do anything. Pure Democracy - You have two cows. Your neighbors decide who gets the milk.

World Ideologies As Explained By Reference to Cows Bureaucracy - You have two cows. At first the government regulates what you can feed them and when you can milk them. Then it pays you not to milk them. Then it takes both, shoots one, milks the other and pours the milk down the drain. Then it requires you to fill out forms accounting for the missing cows. Pure Anarchy-You have two cows. Either you sell the milk at a fair price or your neighbors try to take the cows and kill you.

World Ideologies As Explained By Reference to Cows Militarism -You have two cows. The government takes both and drafts you. Totalitarianism - You have two cows. The government takes them and denies they ever existed. Milk is banned. Fascism - You have two cows. The government takes both, hires you to take care of them, and sells you the milk.

World Ideologies As Explained By Reference to Cows Political Correctness - You are associated with (the concept of “ownership” is a symbol of the male-centered, war mongering, intolerant past) two differently-aged (but no less valuable to society) bovines of non- specified gender. Surrealism - You have two giraffes. The government requires you to take harmonica lessons.

Market Command Democratic Socialism … Constitution Human rights Gov’t owns FOP’s Can vote for more than one party Adam Smith Karl Marx Market Command France Canada Capitalism… Democracy USA, Hong Kong, Taiwan Communism… Cuba N. Korea Soviet Union