The Three Economic “Isms” Capitalism Communism Socialism

Industrialization Leads to New Economic Philosophies.

Industry

Industry-- Factories

Railroads

Capitalism Capitalism– ex. U.S.A. Laissez-faire Individual choice/ freedom of choice Individuals run the business Economic Classes: Rich and poor and middle-class Competition makes goods better and cheaper Government: Democracy

History of Capitalism Result of absolutism and mercantilism Adam Smith (Enlightened economist) Industrialization Britain, U.S. “laissez-faire”

Socialism Government and Economy of the people

Socialism– doesn’t really exist Everyone agrees to share economy Everyone is equal in terms of money Each person will receive money according to how much they need No competition Social Classes: NONE Government: Should be democracy, but dictator never stepped down

Why no Socialism? In history, the dictator had NEVER stepped down! Problem with Marx’s theory, he didn’t take in to account the nature of man

Communism Communism-- ex. N. Korea & Cuba Government controlled Economy Government controls all business decisions No competition Economic Classes: Rich government and Poor citizens (proletariat) Government: Dictator

History of Communism Industrialization led to 2 social classes Proletariat (working poor) Bourgeoisie (wealthy Industry owners)

Proletariat– Factory Workers

Chinese Proletariat

Bourgeoisie-- Educated

Bourgeoisie– Stick Together

Bourgeoisie– Wealthy Industrialists

The 2 classes Clash Karl Marx theorized that the Proletariat would rise up against the Bourgeoisie in a civil war– Have’s vs. Have Not’s Bourgeoisie would lose because they are much smaller Proletariat would require a dictator to control the chaos that follows a civil war Dictator would step down Socialism would ensue The end of social classes

Russian Revolution 'Working people arise!'

Photos of the Russian Revolution

Marxist Theory

The Communist Manifesto Seven Stages to the Establishment of Communism/ Socialism Historical Materialism Theory of Surplus Stages in Economic Development Class Struggle Use of Force Dictatorship of the Proletariat Establishment of Communism/ Socialism

Historical Materialism Marx Theory: Events and Institutions are based on economic forces. The dominant economic class determines the rules and moral of Society. Objections to Marx: Too simple an explanation. Many other factors determine laws and morals; i.e. Catholic Church

Theory of Surplus Marx Theory: Value of goods is based only on the labor of the workers. What they produce is sold for far more than they can make; the result= rich gets richer, poor gets poorer. Objections to Marx: Other factors add to the value of a product; materials, factories, ideas to help produce goods. In U.S. and Europe the poor is not getting poorer because of unions and labor laws.

Stages in Economic Development Marx Theory: There are 5 stages, each superseding the previous stage. Therefore, eventually, Socialism will override Capitalism. Five Stages: Communal, Slave, Feudalist, Capitalist, Socialist Objections to Marx: The stages did not go in order in every culture, ex. China and Japan. There is no proof that Capitalism must fail, or that the next stage would be Socialism.

Class Struggle Marx Theory: Historically, there are opressors and oppressed; bourgeoisie and proletariat. As bourgeoisie grow smaller and powerful, proletariat are treated worse causing them to rise-up. Objections to Marx: Marx did not consider the middle class when developing his theory. He made the assumption the middle class would be with the proletariat.

Use of Force Marx Theory: With the exception of some highly advanced democracies; i.e. the U.S. and G.B., force would be necessary to achieve socialism. Objections to Marx: Changes can be made peacefully.

Dictatorship of the Proletariat Marx Theory: After the force (civil war/ revolution) a dictator will arise briefly until opposition is ended. Then classes will be abolished and a class-less society will emerge. Objections to Marx: Dictatorships do NOT end! This results in a “new” class that is similar to the bourgeoisie, and again proletariat are treated poorly. Ex. U.S.S.R., 50 + Years with a dictator.

Establishment of Communism/ Socialism Marx Theory: During the Dictatorship, communism is established. Public ownership of production, distribution and consumption; eliminating competition and classes, No more class struggle. Work to ability and receive according to NEED. Objections to Marx: How do you determine need? Communists governments are strengthening with more regulations, not becoming socialist.