Capitalism vs Socialism Unit Objectives   Learning about the new ideas that resulted from dissatisfaction with industrialization or advances caused by it Understanding the development and impact of socialism and how it compares to capitalism

What is capitalism?

Capitalism AN ECONOMIC SYSTEM IN WHICH THE MAIN MEANS OF PRODUCTION (FACTORIES, RESOURCES, ETC.) ARE OWNED BY PRIVATE PEOPLE OR BUSINESSES What drives capitalism?

Capitalism PROFIT DRIVES CAPITALISM—MONEY IS INVESTED BY PRIVATE OWNERS WITH THE GOAL OF MAKING PROFIT

Problems with Capitalism Some have argued that government should leave business alone (“Laissez Faire” or “Free Market” capitalism) because anything the government does to regulate businesses (like minimum wage laws or health and safety laws) costs businesses money and is bad for the economy What problems can develop if capitalism is left unregulated?

Problems with Capitalism Can lead to: CORRUPTION LARGE COMPANIES THAT MONOPOLIZE A BUSINESS (BAD FOR THE CONSUMER AND SMALL BUSINESSES THAT CANNOT COMPETE) FACTORIES THAT TAKE ADVANTAGE OF WORKERS

How did that result in the rise of Socialism? MANY FELT NO MEANINGFUL CHANGE WAS COMING TO CAPITALISM BECAUSE GOVERNMENTS AND THE COURTS SUPPORTED THE BUSINESS OWNERS, THEREFORE A SOCIALIST REVOLUTION WOULD BE NECESSARY

What is Socialism? A GOVERNMENTAL AND ECONOMIC SYSTEM IN WHICH THE MAIN MEANS OF PRODUCTION ARE OWNED BY THE GOVERNMENT AND OPERATED FOR THE GOOD OF ALL THERE IS LITTLE OR NO PRIVATE OWNERSHIP OF BUSINESSES

Comparing Capitalism and Socialism: Equity NOT CONCERNED ABOUT EQUITY INEQUITY IS ESSENTIAL TO FUEL COMPETITION, INNOVATION, AND ECONOMIC DEVELOPMENT Strives for equity Wants one equal social class in an effort to eliminate poverty Will redistribute resources from rich to poor Wants equal opportunities and outcomes

Business Ownership Capitalism Socialism Private people own the means of production; Government guides the economy Progress results when people follow their own self-interest THE GOVERNMENT OWNS THE MEANS OF PRODUCTION AND DIRECTS THE ECONOMY PROGRESS RESULTS WHEN EVERYONE COOPERATES FOR THE GOOD OF ALL

Efficiency Capitalism Socialism PROFIT MOTIVATES PRIVATE BUSINESSES TO BE EFFICIENT, CUT COSTS, AND INVENT NEW PRODUCTS Capitalists argue government ownership of businesses leads to inefficiency because the workers and management lack motivation to work hard, cut costs, or be innovative

Unemployment Capitalism Socialism Socialists argue that unemployment can rise because the government is not in charge and does not directly provide jobs, so in times of recession, unemployment rises EMPLOYMENT IS DIRECTED BY THE GOVERNMENT AND CAN BE CONTROLLED EVEN IN TIMES OF RECESSION

Price Controls PRICES DETERMINED BY MARKET FORCES Capitalism Socialism PRICES DETERMINED BY MARKET FORCES BUSINESSES WITH A MONOPOLY CAN CHARGE WHATEVER THEY WANT No monopolies, but when prices are set by the government there can be shortages and surpluses of products because the market is not establishing the need for them, the government is (supply and demand)

Where do Consumers fit in? Capitalism Socialism Consumers compete to buy the best products at the lowest prices forcing business owners to compete with each other for their business SOCIALISTS BELIEVE CAPITALISTS TAKE ADVANTAGE OF WORKERS AND CAPITALISM CREATES UNEQUAL DISTRIBUTION OF WEALTH THAT LEADS TO POVERTY

The role of the government Capitalism Socialism GOVERNMENT SHOULD REGULATE BUT NOT INTERFERE IN THE ECONOMY Government should act to protect workers and equally distribute wealth

What is the biggest difference between Capitalism and Socialism?

THE AMOUNT OF GOVERNMENT INTERVENTION IN THE ECONOMY

What do you think? What sounds good about Capitalism? What are its drawbacks? What sounds good about Socialism? Which would you choose and why?

Socialism vs Communism What is the main difference between Socialism and Communism?

Socialism vs Communism A MATTER OF DEGREE—COMMUNISM MORE EXTREME WITH LESS PRIVATE OWNERSHIP OF BUSINESSES AND PROPERTY, MORE GOVERNMENT CONTROL