Economic Systems Learning Target #12: I can compare and contrast various economic systems (capitalism, socialism, and communism) and evaluate how they were affected by the Industrial Revolution.

Life During the Industrial Revolution Improvements New Inventions Made tasks easier Longer Life Expectancy More Food Faults Poor living conditions Poor working conditions Little to No worker’s rights

What is Capitalism? Break down the word: Capitalism Capital + ism = $$$$$ + system of beliefs Capitalism A competitive economic system where the goal is to make a profit $$$

Adam Smith – Capitalism “Invented” capitalism in the 1700s Wrote “Wealth of Nations” in 1776 “If government would refrain from interfering with with free competition…wealth would increase…” Capitalism became popular and spread to other countries through the industrial revolution. People own private property or capital The government does not control the economy) Progress only happens when individuals follow their self-interest More competition in the market  fair prices and good products

Example: Capitalism in USA In the USA, we have a capitalist economic system Our government allows businesses to compete and do what they want (Laissez Faire) The Goal: To make a profit $$$

Capitalism and Your Cell Phone! Companies (Samsung, Motorola, Nokia, Apple) compete to create and sell smart phones for lower prices. Adam Smith said competition ensures fair prices and good products!

What is Socialism? Break down the word: Socialism Capital + ism = People + system of beliefs Socialism Economic system where factors of production (factories, resources, workers) are owned by the government and main goal is to distribute wealth more fairly.

Life in a Socialist Society Workers have: Better, safer working conditions shorter hours You can make and sell what you want, but you must follow the governments rules, of which there are many High taxes in return for government services Free healthcare, free school, free day care, free preschool A LOT of middle class Not many really poor or really rich

What is Communism? Break down the word: Communism Commun/Community/Commune + ism = group+ system of beliefs Communism An economic system where wealth is distributed evenly and there is no private property The people own everything and there is no competition

Karl Marx – Communism Society has always been divided between “haves” (upper/middle class or bourgeoisie) and “have nots” (working class or proletariat) “Haves” take advantage of “Have Nots” The Industrial Revolution & capitalism made this class struggle worse… So, the “have nots” should fight back and The PEOPLE should own the factors of production