Every Society Must Answer 3 Questions l What

Every Society Must Answer 3 Questions: l What goods will be produced? l How will the goods be produced? l For whom will the goods be produced? l Economic System: the way in which a society decides to answer the 3 questions above- in the end, will government, the people or some kind of a mix of both decide?

The Rock, Paper and Scissors Game and Marxist Theory

Economic Systems Market economy : capitalism l Command economy: socialism, communism l Traditional Economy (Ex: Chad, Haiti, Rwanda) l Mixed economy-mixed w/ elements of both socialism and market l

Market Economies-some are more free than others (Capitalism) Resources are owned and controlled by the people l Economic decisions are made by the people competing to earn profits l Individual freedom is considered very important l Economic decisions are made by the basic principles of supply and demand l Profit is the motive for increasing work l There are many economic freedoms l There is competition among businesses l Competition determines price which increase the quality of the product l More freedom of thought, religion and speech l

Capitalists (Free market economy) l 1. 2. 3. 4. 5. 6. 7. 8. All countries that practice capitalism are actually mixed economies and include some socialist elements, but you can say that the following countries are just a few of many who lean more capitalist: The United States Great Britain South Africa Israel The Dominican Republic Germany Japan South Korea

Which countries are the most capitalist? l http: //images. flatworldknowledge. com/barkan -fig 13_001. jpg

Socialism l Government owns the businesses l Goal: to redistribute wealth between rich and poor l Final Goal eventually: classless society-no rich or poor (economic equality)

Socialism-2 types 1. 2. Marxist-Leninism (Marxist Socialism)-most extreme form-also called communism European-Style Socialism

Marxist-Leninism Socialism The government makes all decisions and determines how resources will be used l No freedom of speech, press or thought l There is no competition l Businesses are not run to create a profit l Called Communism in countries that use it l Healthcare is free and controlled by the gov’t l Consumers have no choices in the market place l Factories are concerned with quotas l Shortages are common because of poorly run factories and farms l The government dictates the job in which you work l The government sets the prices of all goods and services l Religion is either forbidden or heavily monitored by the govt l Based on the writings of Karl Marx and Vladimir Lenin l

European-Style Socialism The government makes many decisions and determines how much of the resources will be used l Allows some capitalism l High tax rates (50% or more) on the rich l Some individual freedom l Some competition l Businesses run to create a profit, but heavily regulated by the Govt l Called Democratic Socialism in counties that use it l Healthcare is usually free and controlled by the gov’t-heavily funded by taxes on the rich l Consumers have fewer choices in the market place l The government sets some of the prices of goods and services like the same gas price at all gas stations across the country l

European-Style Socialists (command economy) 1. 2. 3. 4. 5. 6. 7. 8. France Russia Spain Germany Canada Portugal Argentina Brazil

Communists-most extreme socialism“Marxist/Leninist Socialism” l l 1. 2. 3. 4. 5. There has never been a purely communist country as Karl Marx described with no government and a completely classless society The following countries are ruled by Communist party and call themselves Communists, but they are actually extreme Marxist socialist: (only 18 years ago there were over 20 countries) Cuba China North Korea Vietnam Laos

Mixed Economies-some lean more free market capitalist and some lean more command or socialist Government and individuals share the decision making process l Government guides and regulates production of goods and services offered l Individuals own means of production l Protects consumers and workers from unfair policies l Most effective economy for providing goods and services l Technically, most of world’s economies fall into this category l Some are mixed, but more socialist…some are more socialist