1. Warm up
How did the Industrial Revolution lead to political, economic, and social changes in Europe?

2. Free Enterprise System, Socialism, & Communism
Learning Goal 3: Describe the historical origins and characteristics of the free enterprise system, socialism and
communism and explain how free enterprise affected industrialization. (TEKS/SE’s 8E,17B,18A,B,C,F)
The Big Question:
How did the free enterprise system affect the Industrial Revolution?

3. 3 Questions all Economies must answer:
Basic Economics: Each society has limited resources to meet the unlimited wants of its members
3 Questions all Economies must answer:
What should be produced?
How should it be produced?
Who should benefit from it?

4. Capitalism, Socialism, and Communism in an easy to understand example
The Cow Examples
Capitalism, Socialism, and Communism in an easy to understand example

5. The Cow Example: Capitalism
You have two cows
You sell one cow in exchange for a bull
You breed the two and sell all your calves for profit
Mama cow provides you with milk

6. The Cow Example: Socialism
You have two cows
You give them both to the government
The government redistributes all the cows amongst the entire population
You now own one cow which provides you with milk

7. The Cow Example: Communism
You have two cows
The government takes them both from you
You now own no cows, but work to raise cows on the government-owned dairy farm.
The government decides how much
milk you need and gives it to you

8. The Free Enterprise System (Capitalism)
Key philosopher: Adam Smith published The Wealth of Nations in 1776
Role of Government: Limited
-supplies some services
-sets & enforces rules to ensure economy runs smoothly
Means of production: Privately owned

9. Free Enterprise cont.
Property rights: People have the right to own property & use it as they choose
Competition/Cooperation: Competition improves trade
-new ideas, better quality, lower prices
Worker’s rights: Labor is just another
means of production. Workers are free
to find another job at any time.

10. Socialism Key Thinker: Robert Owen Role of Government: Significant
- owns some of the means of production
-sets & enforces rules to ensure workers treated fairly
-tries to ensure equal distribution of benefits to all people
Means of production: Both publicly & privately owned

11. Socialism cont. Property rights: Still some private property.
Competition/Cooperation: Overall, balances both – but tilted towards cooperation
Worker’s rights: Very important – socialism was created to improve the terrible working conditions of laissez-faire capitalism

12. Communism
Key thinker: Karl Marx, wrote Communist Manifesto in and Capital in 1867
Role of Government: Total control of economy
- answers 3 Basic Economic questions
- govt there to ensure equality & harmony
Means of Production: owned by the
government

13. Communism cont. Property rights: No private property
Competition/Cooperation: Work together to ensure everyone’s needs are met
Worker’s Rights: Everyone is equal – and has equal rights