1. Economic Systems SOL: GOVT. 14b

2. Karl Marx (1818-1883) German philosopher, economist, and sociologist Published The Communist Manifesto and Das Kapital Founder of Marxism: human societies progress through class struggle, Marxists we’re run on behalf of the ruling class and in their interest while representing it for the common good of all Father of Communism and Socialism

3. Karl Marx Continued... Class Struggle- Marx believed there were two classes 1) Bourgeoisie, the rich; and 2) Proletariat, the working class. Marx thought that capitalism would lead the elite Bourgeoisie to become more powerful and smaller as the Proletariat grew and got more upset with the Bourgeoisie, leading to an eventual revolution. Socialism-Marx believed that after the successful revolution the Proletariat (workers) would take control of all the companies and jobs, and people would get paid based on how hard and well they worked (doing the jobs they were best at). Communism- Marx thought the stage after Socialism was Communism, people controlled and owned everything, but everyone got paid the same amount of money for what they did, regardless of their job.

4. Adam Smith (1723-1790) Scottish moral philosopher, and key person in the Enlightenment period Published The Theory of Moral Sentiments and The Wealth of Nations Father of modern economics, laid the foundations of classical free market economies

5. Adam Smith Continued... Free Trade/Laissez-Faire-Smith believed that free trade would benefit countries the most with no government interference. He thought that since everyone is out for themselves, in the end their selfishness will help the entire country. This type of trade will lead to increased competition, which will lead to lower prices for the people and better products. Division of Labor-Smith believed specializing in production is the best way to help an economy. With each person becoming an expert on one technique, the quality of what they are doing will improve and the speed with which they made the good will increase. In other words, dividing labor up helps make more goods better.

6. Traditional Economy Based on the idea that you make what you need for yourself, and you pass it down to the next generation Rural and farm based

7. Free Market Economy Market system in which the prices for goods and services are set freely by consent between vendors and consumers Supply and demand

8. Command Economy Key feature of communist countries Government determines what goods should be produced and at what price their offered at

9. Mixed Economies Seen as an economic system that consists of private and public ownership Some individual freedom, but some government control as well