1. Day 10 Economic Choices Part One

2. Objectives: At the end of this lesson you should be able to: State the major economic questions according to modern economists Define and list characteristics of capitalism, communism/socialism, fascism State differences between command and market economies, and what we mean by a mixed economy Define monopoly and give its characteristics

3. Economic Questions Basic Questions –What should we make? –How much of it should we make? –Who gets it? (How high or low should the price be?) –Who gets to make it? (Means of Production) –Should they be allowed to make a profit?

4. Market Economy Also known as pure capitalism or free market Basic economic questions are determined by the marketplace The means of production are privately owned Profit is allowed Laissez-faire “Invisible hand” Government democratically elected Characterized by competition –Example- USA

5. Command Economy Basic economic questions are determined by the government –Usually a dictatorship, not democracy No competition Government grants monopolies –One company has control of production Or the government has control of production 2 Types of Command Economies: Fascism Communism

6. Fascism Allows private ownership and profit, but rigs the system to favor just a few huge corporations that act as monopolies Examples- Nazi Germany, Imperial Japan Communism Government owns all means of production and no profit allowed Examples- North Korea, former USSR, China (until recently) Socialism is a special case, a command economy in which government is democratically elected Examples- Sweden, Finland

7. Mixed Economy Has elements of both market and command What most nations follow in 21 st Century Really no pure market or command economies among successful countries

8. Challenge On a sheet of paper, draw a horizontal line like the one shown below. Next, write where each economic system and which type of government would fall under each system. Also, try to think of an example for each. Note Left wing and Right wing extremes. CommandMixed Market Mixed Command Your choices for economics systems are: communism/ socialism pure capitalism fascism Your choices for governmental systems are: dictatorship or democracy

9. Economic Spectrum CommandMixed Market MixedCommand Communism/ Socialism Pure CapitalismFascism Dictatorship Democracy Dictatorship

10. What’s missing from the market economy of America at the turn of the century? Competition!!!!! Why is there no competition? –Monopolies How are monopolies being acquired? –Vertical and Horizontal Integration Prelude to Wall Street

12. Is he right? Gordon Gecko is a fictitious character who used his wealth and power to merge his company with others. Where would he fall of the economic spectrum? Which philosophy is he following: Gospel of Wealth or Social Darwinism?

13. Carnegie and Vertical Integration… Rockefeller and Horizontal Integration… We’ll explore this further in Part Two. Both lead to monopolies!