Pure Centrally Planned Economy AKA Communism Objectives: Describe how the three basic economic questions are answered by the different economic systems, and identify their problems.

Communism What are the problems w/capitalism?

Problems w/capitalism

Is there a better way?

Pure Centrally Planned Market aka Communism Public (gov) ownership of all resources Created by Karl Marx (1848) – –Society should share its resources to ensure that the lower classes (workers) are provided for

Gov answers … What to produce? –What’s best for nation: capital goods, military technology How? –Ensure that everyone is working For whom to produce? –Public *No competition

Visible Hand Gov decides Focus on public goods, NOT consumer goods –Consumer goods are rationed (restricted/limited) –In Communist countries – bread lines, years to get a car, better apartment, etc HAVANA, CUBA: A woman walks with her government ration of bread at a government bakery in the central section of Havana, Cuba. Many staples, like bread, rice and meat are still rationed in Cuba.

Is communism better? Advantages Disadvantages  p

Better?! ADV : everyone is provided for DIS  : few consumer items –No incentive to work harder – what will you get if you work harder? Inefficient! –Waste – no pride of ownership b/c it’s never your business or money! –Environmental damage.

Checkpoint # 2 Compare & contrast communism to PURE capitalism Which one is better and why? Explain 2 specific reasons.