Economic Systems Chapter 1 Section 4

Capitalism Adam Smith: Scottish philosopher who wrote the “Wealth of Nations”, in 1776, which lays the foundation for free market economics which will lead to capitalism. Capitalism is defined by private ownership of the factors of production and the profit motive.

Socialism Karl Marx: wrote the “Communist Manifesto”, in 1848, which lays out the argument for public ownership of the factors of production. Marx would argue that capitalism creates class conflicts that would ultimately lead to revolution. Socialism is defined as an economic system where government owns the means of production and ensures the distribution of wealth and economic opportunity equally among people. distreconomic opportunity equally among people

Types of Socialism Communism: socialism imposed on a people by a dictator or oligarchy. Ex. China, N. Korea, Soviet Union (former) Democratic Socialism: People vote to let government own certain industries to provide public services for all such as electricity and health care. Ex. Finland, Denmark, Canada