Economic Theories And How They Affect Governments Economic

Economic Theories And How They Affect Governments

Economic Systems • • Feudalism Imperialism Colonialism Mercantilism

Economic Systems

Capitalism

Capitalism • • • Private ownership Free enterprise Competition among businesses Freedom of choice Possibility of profits

Capitalism The Wealth Of Nations

Capitalism Adam Smith said an invisible hand guides everyone in their personal decision making about their businesses. If we just leave them alone they will usually do what is best for themselves. Often that is also best for the nation.

Capitalism • Free Market – Buyers and sellers are free to make economic decisions. • Laissez-faire – “To let alone” • No nation has “pure” capitalism • Mixed Market Economy – Free market is supported by government decisions

Capitalism So. . . How does Capitalism affect the government of a nation?

Socialism

Socialism • Industrial revolution in 1700’s and 1800’s left many people in Europe in terrible poverty. • Working conditions were horrible and dangerous.

Socialism 1. More equal distribution of wealth and opportunity. 2. Government control of all major decisions about production. 3. Government ownership of most land, factories and major means of production.

Socialism • Most countries of western Europe – Great Britain – Denmark – Norway – Sweden – Germany

Socialism So. . . How does Socialism affect the government of a nation?

Communism

Communism The Communist Manifesto

Communism Capitalists who own the means of production. Workers

Communism Concept: Struggle between workers and owners. Workers want more pay. Workers do not get full compensation. Owners want more profit. This struggle will result in revolution. The goal is government ownership of all means of production.

Communism All decisions are made at the upper levels of government and handed down to managers. The government owns the land, natural resources, industry, banks, transportation, mass communication, newspapers, etc.

Communism So. . . How would Communism affect the government of a nation?

Your Assignment Tonight. . . Ask your parents/guardians/etc. how they view the differences between Capitalism, Socialism, and Communism. – Do they know the difference? – Do they have an opinion about which is best? – Have they ever lived under another system?