economic systems capitalism, socialism & communism

Warm-Up*For our warm-up today, we will be watching a

short video clip. After the video, answer the following questions for your daily warm-up.*

1. Which political group supported monarchies?

2. Which political group supported change?

3. What was the concert of Europe?

4. Was Klemens von Metternich a liberal or a conservative?

5. Which religious group dominated northern Europe?

Liberalism and Conservatism

Economic SystemsCapitalism, Socialism & Communism

The Industrial Revolution • Increased wealth and means of production

•Growing inequality between social classes

•Arguments broke out over how the economy should operate

Which is more important:Liberty or Equality?

•What is Liberty?

•What is Equality?

Capitalism = free market• Maximizes freedom in the economy

• Adam Smith – 1776 – “The Wealth of Nations”

• “Free Enterprise” – no limit to wealth

• Laissez-Faire – “let alone” economy

• Free to succeed and to fail

• Private capital

Capitalism- “the invisible hand”•Private sector provides

services

• Invisible hand: By pursuing their own needs, businesses will improve society unintentionally

The “Threat” of Capitalism“4 Delicious Foods Banned because of Capitalism”

4 Delicious Foods Banned because of Capitalism

North Korea: Choco Pies used to boost morale

suspected of arousing pro-capitalist feelings.

Bolivia: Coca-Cola banned to encourage consumers to

buy local Mocochinchi.

Russia: McDonald’s banned because it “symbolized

America”.

France: Ketchup was taking the place of traditional

Gallic sauces and banned to promote the consumption of

French cuisine…and healthier food.

Socialism- wealth owned by government

• The government controls means of production

• Some private property

• Redistribution through high taxes

[Example: In Sweden the tax rate is very high, but college education and healthcare are covered for all Swedes. ]

Those who pay taxes have their needs met regardless of access to capital.

Communism• Public (government) ownership of capital

• “From each according to his ability, to each according to his need.”

• No competition

• Government provides basicneeds and pay

History of Communism•Karl Marx – 1848

“The Communist Manifesto”

• Father of Communism

1. All history is a class struggle.

2. All value comes from labor/work.

3. The government always sides with the rich.

4. The poor must overthrow the government and set up a classless society.

Rock, Paper, ScissorsPlease clear your desks.

Rock, Paper, Scissors• I am going to give each of you poker

chips.

•Once everyone has theirs, you will play R,P,S. If you lose, you must give the winner one of your chips.

• Sit down when you run out of chips.

Rock, Paper, Scissors

•How did you feel about Round 1?

•Was it fair?

Rock, Paper, Scissors

• I’m going to come around the room and offer you as many chips as you would like.

•Take whatever you think is fair.

Rock, Paper, Scissors

•Now I will collect all the chips and redistribute them equally.

•Is this fair?

Warm-UpTurn in the map packets you received before the snow!

1. What is laissez-faire economics?

2. Who wrote The Wealth of Nations?

3. Explain the invisible hand principle

4. What is redistribution, and how does it relate to socialism?

5. What is a difference between socialism and communism?

The History of Economics in QuotesOn your handout, summarize the text in each quotation.

1. “Advocates of capitalism are very apt to appeal to the sacred principles of liberty, which are embodied in one maxim: The fortunate must not be restrained in the exercise of tyranny over the unfortunate”Bertrand Russell

2. “The inherent vice of capitalism is the unequal sharing of blessings; the

inherent virtue of socialism is the equal sharing of miseries.”

Winston Churchill

3. “History suggests that capitalism is a necessary condition for political freedom.”

Milton Friedman

4. “This American system of ours, call it Americanism, call it capitalism, call it what you will, gives each and every one of us a great opportunity if we only seize it with both hands and

make the most of it.”

Al Capone

5. “I find capitalism repugnant. It is

filthy, it is gross, it is alienating...

because it causes war, hypocrisy and

competition.”

Fidel Castro

6. “The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system.”

Milton Friedman

7. “Socialism proposes no adequate substitute for the motive of enlightened selfishness that to-day is at the basis of all human labor and effort, enterprise and new activity.”

William Howard Taft