1. Capitalism, Socialism, and Communism

2. Capitalism
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” - Smith

3. Capitalism
Capitalism – an economic system based on private ownership and the use of capital
Capital = wealth in the form of property or money that is used to make more money

4. Capitalism 3 Main Ideas:
Private ownership: people are free to use their capital as they choose
Profit Motive: when enough people demand a product, producers will supply it because they want to make a profit = law of supply and demand

5. Capitalism
Market Economy: buyers and sellers are free to exchange goods and services, with prices determined by supply and demand

6. Capitalism Government should not interfere in the economy.
Laissez faire

7. Capitalism
Laissez faire – letting owners of industry and business set working conditions without interference
No government regulations, such as minimum wage laws

8. Capitalism Positive Effects: Negative Effects:
Competition led to progress
Encourages economic growth
Negative Effects:
Unequal distribution of wealth led to social unrest

9. “From each according to his/her ability, to each according to his/her need."
Communism
“The worker of the world has nothing to lose, but their chains, workers of the world unite.” - Marx

10. Communism
Communism – an economic system in which all means of production are owned by the people, private property does not exist, and all goods and services are shared equally.

11. Communism Karl Marx German journalist Radical Socialist
Wrote “The Communist Manifesto”

13. Communism Friedrich Engels
Son of a wealthy German textile entrepreneur
Radical Socialist
Co-Wrote “The Communist Manifesto” and “Das Capital”

15. Communism
In many ways, Communism was a reaction to the Industrial Revolution and Capitalism

16. Communism
The Industrial Revolution intensified class struggle (rich vs. poor)
“Haves” (bourgeoisie) take advantage of “Have-Nots” (proletariat)

17. Communism Believe that in a Capitalist system:
Workers are exploited by employers
The labor of workers profits employers

18. Communism
Marx believed that workers were controlled by false consciousness and alienation

19. False Consciousness
Marx said that in a capitalist society, workers are controlled by false ideas that are presented as universal societal values
According to Marx: Not only are these ideas wrong but they serve an important political function → they control the proletariat
Hindu Caste System, Christianity, Consumerism, Patriotism, American Dream

20. Alienation (Separation)
Marx believed that there are 3 types of alienation in a capitalist society
The worker is alienated from what (s)he produces
The worker is alienated from him/herself
People are alienated from eachother

21. Communism
Marx and Engels called for workers of the world to unite and overthrow the rule of the rich.
Wealth would be redistributed based on need
Classes and private property would cease to exist

22. Communism Positive Effects Negative Effects
Everyone’s needs are provided for
Can eliminate social unrest
Negative Effects
No incentive to work
Frequent shortages

23. Command Economy True communism requires a command economy
Command economy: the central government makes all important decisions in the best interest of the society
Government took control of land, factories, banks, etc
Government decided what would be produced, what crops would be grown, and what would be charged for them

24. Communism There have been no purely communist countries
How can a country be communist when pure communism doesn’t allow for governments, countries, or class divisions?
Countries that we think of an “communist” are run by the “Communist Party”

25. “Communist” countries have been run by dictators or have been dominated by a single political party
This doesn’t mean that they are run according to Marxist principles

26. Communism Today Communist Countries: Cuba 127/167 China 144/167
Laos 157/167
North Korea 167/167
Vietnam 130/167

27. “From each according to his/her ability, to each according to his/her work."
Socialism

28. Socialism
Socialism – an economic system in which factors of production are owned by the public and operate for the benefit of all.
Private ownership is still allowed

29. Socialism Government actively regulates the economy
Controls major industries and resources
Provides social security, unemployment benefits, minimum wage, etc

30. Socialism
Marx believed Socialism was the midpoint between Capitalism and Communism

31. Socialism vs Communism
Everyone has equal share in profit and property
No money or no ownership
No state

32. Recap
When we learn about the different types of economies the first thing we do is ask some simple economic questions:
How is it made?
Who makes it?
Who gets to buy it?
Based on the economy, different people answer those questions.

33. In a communist country, the government answers those questions
In a communist country, the government answers those questions. There's no private business. There's no private property. The government decides.

34. In a capitalist society, the people make those decisions
In a capitalist society, the people make those decisions. The businesses, the market decides how much products will cost, how many there are, where it will be made.

35. In the socialist system, there's a mix of both
In the socialist system, there's a mix of both. The government operates the system to help all, but there is opportunity for private property and private wealth.