Chapter 2 Section 3 Slide 1 Centrally planned

Chapter 2 Section 3

Slide 1 • Centrally planned economies operate in direct contrast to free market systems. • Centrally planned economies are the type of economy where the government is basically in control of everything in the country.

Slide 2 • The central government answers the 3 key economic questions for the country. • Questions dealing with production will be addressed by the government. • State-Can be used to refer to the federal government. i. e. a ‘state-run factory’

Slide 7 • In a centrally planned economy, the government owns and controls the three factors of production • The federal govt. will make all decisions on how to develop land, labor, and capital

Slide 9 • Socialism is a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society. • This was brought about as a means to keep rebellion against the government from taking place.

Slide 10 • Communism- Political system characterized by a centrally planned economy where all power rests in the hands of the central govt. • It is the political system that arose out of the philosophy of socialism. • Communism and socialism are not the same thing, but often go together

Slide 11 • Authoritarian is where governments exact strict obedience from their citizens. • Some communist type governments are authoritarian in nature due to the fact that the govt. controls the economy • Many individual freedoms are suppressed by an authoritarian style govt.

Slide 12 • The former Soviet Union was a communist country.

Slide 13 • The government of the soviet union had collectives or large farms leased from the state to peasant farmers or people who want to have a farm in the country. This means that the people had to pay monthly or yearly how ever it was set up or maybe they had to give a portion of the farms profits to keep the land.

Slide 14 • The factories in the soviet union were also state owned.

Slide 15 • Heavy Industry requires a large capital investment to produce items used in other industries. • Examples would be for the space program or the military

Slide 16 • The Soviet Union arose out of a pair of revolutions in Russia in 1917. • This is when the Soviet Union really got started. • Soviet planners were most concerned with building national power and prestige • Soviet Union had central government state- owned farms and factories.

Slide 17 • On state run farms the state provides farmers with all the equipment needed to run the farm. • The state also gets some of the profit that the farm makes and then pays the farmers with that money.

Slide 18 • Farmers receive a share of what is produced on the farm or the amount of income that is made on the farm. • All factories are owned by the state and the workers there were also paid by the state. • Jobs in factories are guaranteed and the wages were paid by the government, not the factory. • Factories had quotas they had to hit with production.

slide 19 • When the production quota was met then there was no reason to keep working or making the product that they produce. • So if you finished ten days ahead of schedule then you would probably just get the rest of those ten days off.

slide 20 • The products made in the Soviet Union were of poor quality and made at a great speed of rate. • Most companies didn’t focus on quality but mostly quantity due to the nature of the quota system.

Slide 21 • Central planning could be used to jump start an industry and guarantee many jobs and income.

slide 23 • A disadvantage with centrally planned economies is that their performance almost always falls short of what they need for their citizens. • This is due to the difficulty of central planning. Especially, for a large country.

Slide 25 • Centrally Planned Economies do not reward innovation, and actively discourage certain types of thinking and change that govt. officials feel would undermine govt. control. • The centrally planned economies have lacked flexibility to adjust for the needs and wants of consumer demands.

Slide 26 • Command economies sacrifice individual freedoms in order to pursue societal goals. • In some cases, the government controls what job you work in a command economy.

Slide 29 • Karl Marx and Friedrich Engels introduced their socialist philosophy in the book The Communist Manifesto in the year 1848.

Questions • How do socialism and communism differ?

• What characterizes an authoritarian government?

• In the Soviet Union, what was the opportunity cost of the emphasis on heavy industry?

• Why do centrally planned economies have difficulty meeting consumer needs?

• Describe how a centrally planned economy is organized?

• Identify the problems of a centrally planned economy?

• Which of the following economic goals are difficult to achieve in a centrally planned economy? A)economic efficiency B)economic security and predictability C)economic equity D)economic growth and innovation

• What centrally planned government was the former Soviet Union under?

• How did the Soviet Union form?

• What did the state provide all farmers with on state-run farms?