1. Comparative Economic & Political Systems
Chapter 18
Section 1

2. Comparative Economic Systems: Capitalism
Capitalism: An economic system characterized by open competition in a free market and based on private ownership
Private Ownership: Most of the means of production (factories, stores, etc.) are privately owned
Factors of Production: Four types of resources necessary to produce; land, human resources, capital (money & machinery), and management to organize

3. What a Great Year
Adam Smith codified the tenets of Capitalism in the book The Wealth of Nations
Economic freedom for the individual
Published in 1776

4. Comparative Economic Systems: Capitalism
Free Competition: People should compete ethically & freely, the most deserving person succeeds; keeps prices down and quality up (in theory)
Supply & Demand: Prices determined by how many products there are to go around and how much people want those products
Freedom of Choice: All people in a capitalist system freely choose when and how to participate
Entrepreneurs: A person who organizes and develops new ideas for business
Laissez-faire: Economic theory that opposes governmental interference in big business

5. Communism vs Capitalism

6. Comparative Economic Systems: Communism
Communism is based on the theories of Karl Marx (an idiot)
Communism: System of government in which the state controls the means of production
Bourgeoisie: The group that owns the means of production
Proletariat: The group that labors without owning the means of production

7. Comparative Economic Systems: Communism
Marx wrote in The Communist Manifesto:
Originally, people lived in communal societies where everyone was basically equal
“Private property” caused problems for people, dividing them into two social classes (bourgeoisie & proletariat)
As workers give a product its value (by making it), they deserved the highest pay
Whoever controls the economy controls everything else (including the government)
Capitalism would lead to extreme class divisions and ultimately revolt
The state would come in and rule the masses until a “classless society” was ready to take over and the state would wither away

8. Marx quotes Religion is the opiate of the masses
From each according to his ability to each according to his needs
Workers of the world unite

9. Marx is an idiot, not understanding the basics of human nature
Marx is an idiot, not understanding the basics of human nature. People will not work so that others can be at leisure

10. Comparative Economic Systems: Socialism
Socialism: Economic system advocating some government ownership of the means of production
Rejects ideas of capitalism
Rejects the extreme communist beliefs regarding the inevitability of the proletariat revolution

11. Comparative Economic Systems: Socialism
Socialists believe:
Class equality can come through peaceful means (not violent overthrow proposed by communism)
Nationalization: Some major industries are taken over by the state (those needed by the public; transportation, utilities, etc.)
Public Assistance: Want to limit wealth, but also limit poverty by providing everyone with housing and food
Taxation: Taxes are high for everyone, but highest for the wealthiest
Command Economy: Economic system where the government has great control over the economy (plan its development, production targets & guide investments)

12. Comparative Economic Systems: Mixed Economies
Many economies are not wholly capitalistic or socialistic, rather a combination of the two
May lean more towards one or the other depending on who is in charge at the time