A DAY-2/6/2012 B DAY-2/7/2012 Objective TLW identify the historical origins and characteristic of the free enterprise system, communism, through class centered instruction and independent studies Agenda Modern Economic Systems: Capitalism, Socialism, and Communism

MODERN ECONOMIC SYSTEM INTRODUCTION From the 18 th century the industrial revolution transformed Western Europe and N. America from agricultural, trading nations to industrial nations. The metamorphosis of these country’s economic structures led to great and complex changes in the lives of their people. The average worker went from being a self-employed farmer to being an employee at a large factory and the working class was formed. As a direct result of industrialization, the free enterprise system (capitalism) expanded and two new economic systems emerged: socialism and communism.

BASIC ECONOMIC TERMS Land Natural resources or gifts of nature that are used to produce goods and services Labor Productive services provided by human beings, including physical effort, skills, intellectual abilities and applied knowledge Capital All buildings, equipment and human skills used to produce goods and services

BASIC ECONOMIC TERMS Means of production Refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth Goods and Services Goods - objects that can satisfy people's wants Services – activities that can satisfy people’s wants Limited Resources Resources that cant be replaced or replaced fast enough

BASIC ECONOMIC TERMS Supply and Demand Supply - how much of a good producers make available Demand – how much of a product consumers are willing to buy The Good of Society What economic system is best for a particular society For Present and Future What’s the end goal for each political system

ECONOMIC SYSTEMS DEFINITIONS Capitalism An economic system in which the means of production are privately owned. All economic decisions are made by the producers and the consumers with the purpose to create a profit.

ECONOMIC SYSTEMS DEFINITIONS Socialism A political and economic theory based on the collective; to end the poverty and injustice that developed as a result of the IR, the people as a whole rather than private individuals would take over through social change and own and operate the means of production.

ECONOMIC SYSTEMS DEFINITIONS Communism Holds the belief that violent revolution is necessary to destroy the inequalities between employees and employers; Advocates the elimination of private property; goods are owned in common, available to all as needed. Economic decisions are made by a central authority (command economy).

COMMUNISM “Workers of the world unite: You have nothing to lose but your chains” Karl Marx ( ) The struggle between workers & employers is unavoidable. There must be a revolution not against the gov’t, but against rich The “Haves” ---- The “Have- Nots”

WHAT IS COMMUNISM? This is the symbol of Communism – The Hammer and the Sickle Hammer for the Workers Sickle for the Peasants – the farm labourers This is Karl Marx, the ‘Father of Communism’. People who believe in his ideas are called ‘Marxists’

THE ROAD TO COMMUNISM Marx and Engels studied the history of the world’s economies. Marx and Engels studied the history of the world’s economies. This means the way that power, industry and finance are controlled. This means the way that power, industry and finance are controlled. They saw the way countries developed in stages. They saw the way countries developed in stages. Primitive Communism Feudalism Capitalism Socialism Communism Explain these please!

Primitive Communism This is how humans first lived together – in small tribes. Primitive means ‘not very advanced’ e.g. hunting and gathering. Communism means that everything was shared amongst the tribe – food, jobs, belongings. No-one owned land. Eventually a group comes to power – this leads to Feudalism…

FEUDALISM PrimitiveCommunism Feudalism Under feudalism, a king or emperor or chief becomes the ruler over all the people. He gives land and privileges to ‘nobles’ who rule the people for him. The people are kept uneducated and told that god chose the king to rule. The church helps the king this way. As trade develops, some people get richer. This leads to Capitalism…..

FEUDALISM TO CAPITALISM Feudalism Capitalism The business owners or capitalists get richer while the workers do all the hard work. The capitalists get more power to serve their own interests. Capitalism creates a huge working- class of people who soon get angry at the way they are treated. They organise in unions and demand changes. This will lead to a revolution and Socialism…

CAPITALISM TO SOCIALISM Socialism Capitalism In the Socialist revolution all the rulers – kings, churches, capitalists are done away with. The workers take control of the country to produce things for everyone. Because nothing is made for profit, all people benefit from education and health. These ideas spread across the world to create Communism…

SOCIALISM TO COMMUNISM Socialism Communism The remaining capitalists put up a bitter fight, but the will of the people will always win. As everyone now works together, war is a thing of the past – armies are not needed. Sharing means no police are needed. Everything is provided by the people – so money becomes a thing of the past. All human activity goes towards benefiting each other – allowing all to live their lives to the full.

WHICH ECONOMIC SYSTEM?

IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO: #1: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to improve its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO: #7: The Communists disdain to conceal their views and aims. They openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win. Working Men of All Countries, Unite!

#2: “…human nature can be changed: since we are all products of our environment, one need only change the environment to change man.” IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

#3: Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

#4: “Man [should be] free from the trinity of evils responsible for all the world's misery and vice: traditional religion, conventional marriage … and private property.” IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

#8: “Little else is requisite (required) to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.” IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

#5: “You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non- existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society.” IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

#9: "What ideas individuals may attach to the term "Millennium" I know not; but I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little, if any misery, and with intelligence and happiness increased a hundredfold: and no obstacle whatsoever intervenes at this moment except ignorance to prevent such a state of society from becoming universal". IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

#6: “The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections (sic) everywhere.” IDENTIFY WHICH ECONOMIC SYSTEM THE FOLLOWING QUOTE APPLIES TO:

KEY: #1: Capitalism (Milton Freidman) #2: Communism (Marx/Engels-Communist Manifesto) #3: Socialism (Robert Owen) #4: Capitalism (Adam Smith) #5: Socialism (Robert Owen) #6: Capitalism (Adam Smith) #7: Communism (Marx/Engels-Communist Manifesto) #8: Socialism-(Robert Owen-A New View of Society) #9: Communism (Marx/Engels-Communist Manifesto)