1. Capitalism versus Socialism

2. The economic system known as capitalism developed gradually over centuries, originating during the late Middle Ages.
During the 19th century societal changes due to industrialization led some people believe that capitalism caused certain problems, such as the abuse of workers.
These critics of capitalism responded by developing a new economic system called socialism

3. Capitalism
Definition: economic system in which the factors of production are privately owned & money is invested to make a profit

4. Capitalism Adam Smith: wrote The Wealth of Nations
Believed in Laissez-faire economics – gov’t should NOT interfere in a free market

5. Capitalism 3 Natural Laws of Economics:
Law of Self-Interest: People work for their own good
Law of Competition: Competition forces people to make a better product
Law of Supply & Demand: Enough goods would be produced at the lowest possible price to meet demand

6. Socialism
Definition: economic system in which the factors of production are owned by the public and operate for the welfare of all

7. Socialism Grew out of a concern for social justice
Government should control key industries to end poverty and promote equality

8. Capitalism
Socialism
Individuals & businesses own property & means of production (private)
The community or state owns property & the means of production (public)
Means of production: refers to physical, non-human, inputs used in production including factories, machines, tools and natural resources – TOOLS NECESSARY TO RUN AN INDUSTRY

9. Capitalism
Socialism
Progress results when individuals follow their own self-interest
Progress results when a community of producers cooperate for the good of all

10. Capitalism
Socialism
Businesses follow their own self-interest by competing for consumer’s money
Socialists believe that capitalism takes advantage of the worker

11. Pizza Anyone?
Dominos Pizza
Papa John's Pizza
Pizza Hut Pizza

12. Not lovin’ it

13. Capitalism
Socialism
Each business tries to produce goods or services that are better & less expensive than those of competitors
The community or state must act to protect workers and consumers
Means of production: refers to physical, non-human, inputs used in production including factories, machines, tools and natural resources – TOOLS NECESSARY TO RUN AN INDUSTRY

14. Capitalism
Socialism
Consumers compete to buy the best goods at the lowest prices
Socialists believe that capitalism creates an unequal distribution of wealth

15. The Ultimate Price?
The Ultimate Price?

16. U.S. Distribution of Wealth 2013

17. Capitalism
Socialism
Consumer competition shapes the market by affecting what businesses are able to sell
Rather than competition, goods should be distributed according to each person’s need
Means of production: refers to physical, non-human, inputs used in production including factories, machines, tools and natural resources – TOOLS NECESSARY TO RUN AN INDUSTRY

18. Capitalism
Socialism
Gov’t SHOULD NOT interfere in the economy because competition creates efficiency in business
Gov’t SHOULD control & regulate the economy to protect workers & consumers
Means of production: refers to physical, non-human, inputs used in production including factories, machines, tools and natural resources – TOOLS NECESSARY TO RUN AN INDUSTRY

19. Marxism – Radical Socialism
According to Karl Marx the economy is a major force for change
Change generally occurs through class struggle
The “HAVES” v. the “HAVE-NOTS”

20. Marxism – Radical Socialism
Throughout history the “HAVES”:
Control politics & government
Create & control culture

21. Marxism – Radical Socialism
As a result of this influence on society the “HAVES” have historically kept their position on top of the social structure

22. Marxism – Radical Socialism
Said the large proletariat would revolt, seize factories/mills from the capitalists, & produce what society needs

23. Pharaohs, priests, royal families, etc.
Time Period
The
“Haves”
“Have-Nots”
Egypt
Pharaohs, priests, royal families, etc.
India
Upper castes: priests & rulers
Slaves, peasants
Lower castes: servants & slaves

24. Middle Class (Bourgeoisie) Factory Owners Nobles, landowners
Time Period
The
“Haves”
“Have-Nots”
Middle
Ages
Peasants, serfs
Age of Industry
Middle Class (Bourgeoisie)
Factory Owners
Nobles,
landowners
Factory workers (Proletariat)

25. Communism (in theory) Pure Socialism in Marx’s Vision = Communism
ALL “HAVES” & NO “HAVE-NOTS”
Classless society with NO gov’t
All goods & services shared equally

26. In the American System?
Business can require workers to work for unlimited hours
Businesses compete with each other for customers
Hiring practices permit discrimination
Huge variety of products available
Individuals can start a business

27. In the American System? Individuals can own a business
People can improve material wellbeing through hard work
Prices vary with availability and demand
Production of too many goods results in discount stores
Some people do not have health care

28. In the American System? Unregulated monopolies
Wages vary according to the availability of that type of worker
Workers laid off if demand drops or business fails
40 hour work week
Bankruptcy laws

29. In the American System? Child labor laws
Government protection of bank deposits
Higher tax rates for wealthier people
Government inspection of meat/restaurants

30. In the American System? Medicare Minimum wage
Old age/retirement payments by the gov’t
Over-time pay
Public libraries, parks, & schools

31. In the American System? Workman’s compensation for injury on the job
Workplace safety inspection
No private ownership of the means of production
Equal pay for equal work