Capitalism, Socialism, and Communism

Draw This Chart (for your notes) Capitalism Socialism Communism Definition Person Associated Written Works Government Involvement Type of Government Extra Important Details

Capitalism Capitalism – an economic system based on private ownership and on the investment of money in business ventures in order to make a profit. Capitalism has always existed. Markets produce what consumers want to buy (a good or service). Capitalism and market competition fueled the Industrial Revolution.

CAPITALISM Businesses compete with each other for the consumer’s money. Each business tries to provide goods and services that are better and less expensive than their competition.

Capitalism Joint-stock companies were good examples of capitalistic endeavors and were the first corporations. Capitalism is based on entrepreneurialism and innovation.

Capitalism Adam Smith University professor in Scotland Supported Capitalism Wrote “The Wealth of Nations” Capitalism is what makes people and countries wealthy

Capitalism Laissez faire – letting owners of industry and business set working conditions without interference No government regulations, such as minimum wage laws

Capitalism Positive Effects: Negative Effects: Competition led to progress Growth of the middle class Negative Effects: Unequal distribution of wealth led to social unrest

The Effect of Capitalism: However, dissatisfaction rose within the working classes (usually factory workers) who saw their bosses growing more wealthy, but their wages were still low. Working conditions did not improve and a desire for an equal distribution of wealth grew

“From each according to his/her ability, to each according to his/her work." Socialism

Socialism Socialism – an economic system in which the factors of production are owned by the public and operate for the welfare of all. Theoretically society as a whole makes decisions.

Socialism Government actively regulates the economy Controls major industries and resources.

“From each according to his/her ability, to each according to his/her need." Communism “The worker of the world has nothing to lose, but their chains, workers of the world unite.” - Marx

Communism Communism – an economic system in which all means of production are owned by the people, private property does not exist, and all goods and services are shared equally.

Communism Karl Marx German journalist Radical Socialist Wrote “The Communist Manifesto”

Communism Friedrich Engels Son of a wealthy German textile entrepreneur Radical Socialist Co-Wrote “The Communist Manifesto” and “Das Capital”

Communism In many ways, Communism was a reaction to the Industrial Revolution and Capitalism

Communism The Industrial Revolution intensified class struggle (rich vs. poor) “Haves” take advantage of “Have-Nots” Marx and Engels called for workers of the world to unite and overthrow the rule of the rich.

Communism Wealth would be redistributed Classes and private property would cease to exist

SOCIALISM and COMMUNISM Both emphasize the importance of redistribution of wealth. In both cases, governments own the means of production. In other words, governments own factories and other industries and they set prices and quantities produced.

Countries that have tried communism: Russia (Union of Soviet Socialist Republics) China North Korea Cuba Countries that have tried socialism: Great Britain France Greece Sweden Venezuela United States?

Chart Answers Capitalism Socialism Communism Definition private ownership and investment of money to make a profit. factors of production are owned by the public and operate for the welfare of all all production is owned by the people, not private property, all goods/ services are shared equally Person Associated Adam Smith NONE Karl Marx Friedrich Engels Written Works Wealth of Nations Communist Manifesto & Das Capital Government Involvement Laissez-Faire – no gov’t regulations Control of major industry & resources Control of ALL means of production Type of Government Democracy Dictatorship Extra Important Details Joint-Stock Company Entrepreneur Importance of redistribution of wealth, gov’t sets prices and quality