Capitalism Socialism and Communism Capitalism It is not
- Slides: 35
Capitalism, Socialism, and Communism
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
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
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
Capitalism § Market Economy: buyers and sellers are free to exchange goods and services, with prices determined by supply and demand
Capitalism § Government should not interfere in the economy. ►Laissez faire
Capitalism § Laissez faire – letting owners of industry and business set working conditions without interference ►No government regulations, such as minimum wage laws
Capitalism ►Positive Effects: § Competition led to progress § Encourages economic growth ►Negative Effects: § Unequal distribution of wealth led to social unrest
“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
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.
Communism ►Karl Marx § German journalist § Radical Socialist § Wrote “The Communist Manifesto”
Communism ►Friedrich Engels § Son of a wealthy German textile entrepreneur § Radical Socialist § Co-Wrote “The Communist Manifesto” and “Das Capital”
Communism ►In many ways, Communism was a reaction to the Industrial Revolution and Capitalism
Communism ►The Industrial Revolution intensified class struggle (rich vs. poor) § “Haves” (bourgeoisie) take advantage of “Have-Nots” (proletariat)
Communism § Believe that in a Capitalist system: ►Workers are exploited by employers ►The labor of workers profits employers
Communism ► Marx believed that workers were controlled by false consciousness and alienation
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
Alienation (Separation) ► Marx believed that there are 3 types of alienation in a capitalist society 1. The worker is alienated from what (s)he produces 2. The worker is alienated from him/herself 3. People are alienated from eachother
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
Communism ► Positive Effects § Everyone’s needs are provided for § Can eliminate social unrest ► Negative Effects § No incentive to work § Frequent shortages
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
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”
► “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
Communism Today ► Communist Countries: § Cuba 127/167 § China 144/167 § Laos 157/167 § North Korea 167/167 § Vietnam 130/167
“From each according to his/her ability, to each according to his/her work. " Socialism
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
Socialism ►Government actively regulates the economy § Controls major industries and resources § Provides social security, unemployment benefits, minimum wage, etc
Socialism ►Marx believed Socialism was the midpoint between Capitalism and Communism
Socialism vs Communism Socialism Communism ►Everyone has ►No money or equal share in profit and property no ownership ►No state
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.
In a communist country, the government answers those questions. There's no private business. There's no private property. The government decides.
► 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.
► 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.
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