Warm up How did the Industrial Revolution lead to political, economic, and social changes in Europe?

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

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

The Free Enterprise System (Capitalism) Key philosopher: Adam Smith published The Wealth of Nations in 1776 Role of Government: Limited -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 Competition/Cooperation: Competition improves trade -new ideas, better quality, lower prices Worker’s rights: Labor is just another means of production. Workers are free to find another job at any time.

Socialism Key Thinker: Robert Owen Role of Government: Significant - 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

Socialism cont. Property rights: Still 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

Communism Key thinker: Karl Marx, wrote Communist Manifesto in 1848 and Capital in 1867 Role of Government: Total control of economy - answers 3 Basic Economic questions - govt there to ensure equality & harmony Means of Production: owned by the government

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