1. Economic Systems

2. Capitalism  A system based on private ownership of the means of production.  Also based on concept of free enterprise. Q. What does free enterprise mean? A.Means that government intervention in economy should be restricted and that a free market, based on supply and demand will ultimately maximize consumer welfare.  Principles were articulated by Adam Smith in his treatise, The Wealth of Nations. -Coined the term “invisible hand” which is the belief that the greatest benefit to a society is brought about by individuals acting freely in a competitive market place in the pursuit their own self-interest.

3. Capitalism cont.  Is the United States a capitalist nation?  Yes, but not to the fullest extent, Why?  Can you name events in history when the U.S Government played major roles in the economy? –Stop slavery –The Great Depression, Great Society –End monopolies

4. Socialism  An economic theory that advocates a system of collective or government ownership and management of means of production and distribution of goods.  Where capitalism stresses competition and profit, socialism calls for cooperation and social service.  Different nations have implemented socialism in different ways. –Ranges from theories that stress partial government control to total responsibility for economic planning

5. Socialism cont.  Many Western European nations have experimented with forms of socialism.  Can you think of any aspects of socialism that the U.S has adopted or considered adopting? –National Healthcare –Social programs during Great Depression –“Great Society” policy in 1960’s –Welfare

6. Communism  System of social organization in which property is held in common.  All property is owned by the people and regulated by the state  No competition exists in a communist society.  The Communist manifesto by Karl Marx and Friedrich Engels –Wrote about the inevitability of a communist society –Those who were exploited would overthrow the capitalists

7. Communism cont.  Examples of Communist nations today are? –China, North Korea, and Cuba

8. Mixed Economies  No system exists in any country in its pure form.  Today, nations have elements of different Economic Systems.  They contain privately-owned and state-owned enterprises.