Free Enterprise System, Socialism, & Communism Learning Goal 3: Describe the historical origins and characteristics of the free enterprise system, socialism and communism and explain how free enterprise affected industrialization. (TEKS/SE’s 8E,17B,18A,B,C,F) The Big Question: How did the free enterprise system affect the Industrial Revolution?

3 Major Questions all Economies must answer: Basic Economics: Each society has limited resources to meet the unlimited wants of its members 3 Major Questions all Economies must answer: What should be produced? How should it be produced? Who should benefit from it?

These are all ideas about governments should set up their countries economies. We will look at what each economic system believes about certain aspects of an economy Philosopher (who came up with it) Role of government Means of production (who makes goods/sells goods/offers services) Property Rights Competition OR Cooperation (or both?) Workers rights (if any…)

The Free Enterprise System (Capitalism) Key philosopher: Adam Smith published The Wealth of Nations in 1776 Role of Government: Very Limited -*Laissez faire (not involved; hands off) -supplies some services -sets & enforces rules to ensure economy runs smoothly Means of production: Privately owned

Free Enterprise cont. Property rights: People have the right to own property & use it as they choose Note: Property doesn’t just mean land but THINGS too Competition/Cooperation: Competition improves trade -new ideas, better quality, lower prices Worker’s rights: Not important. Labor is just another means of production. After all, workers are free to find another job at any time.

Socialism Key Thinker: Robert Owen Role of Government: Involved - owns some of the means of production -sets & enforces rules to ensure workers treated fairly -tries to ensure equal distribution of benefits to all people Means of production: Both publicly & privately owned (a mix)

Socialism cont. Property rights: Some private property Competition/Cooperation: Overall, balances both – but tilted towards cooperation Worker’s rights: Very important – socialism was created to improve the terrible working conditions of laissez-faire capitalism *Unions: groups of workers organized to represent workers & fight for workers rights

Communism Key thinker: Karl Marx, wrote Communist Manifesto in 1848 and Capital in 1867 Believed the *proletariat (working people) will/should rise up & overthrow the bourgeoisie* (middle class; employers to create a more equal society Role of Government: Total control of economy - answers 3 Basic Economic questions - Gov’s role to ensure equality & harmony Means of Production: owned by the government, no private ownerships

Communism cont. Property rights: No private property Competition/Cooperation: Work together to ensure everyone’s needs are met Worker’s Rights: Everyone is equal – and has equal rights

Capitalism, Socialism, and Communism in an easy to understand example The Cow Examples Capitalism, Socialism, and Communism in an easy to understand example

The Cow Example: Capitalism You have two cows You sell one cow in exchange for a bull You breed the two and sell all your calves for profit Mama cow provides you with milk

The Cow Example: Socialism You have two cows You give them both to the government The government redistributes all the cows amongst the entire population You now own one cow which provides you with milk

The Cow Example: Communism You have two cows The government takes them both from you You now own no cows, but work to raise cows on the government-owned dairy farm. The government decides how much milk you need and gives it to you

On the back of your paper, draw an arrow (to signify a continuum) Communism Most governmental involvement Socialism Mix of government & private Capitalism (free market) No government involvement