Download Capitalism v. Socialism

Capitalism versus
Socialism
• The economic system known as
capitalism developed gradually over
centuries, originating during the late
Middle Ages.
• During the 19th century societal
changes due to industrialization led
some people believe that capitalism
caused certain problems, such as the
abuse of workers.
• These critics of capitalism responded
by developing a new economic system
called socialism
Capitalism
• Definition:
economic system
in which the
factors of
production are
privately owned
& money is invested to make a
profit
Capitalism
• Adam Smith: wrote
The Wealth of Nations
• Believed in Laissez-faire
economics – gov’t should NOT
interfere in a free market
Capitalism
• 3 Natural Laws of Economics:
1. Law of Self-Interest: People work for
their own good
2. Law of Competition: Competition
forces people to make a better
product
3. Law of Supply & Demand: Enough
goods would be produced at the
lowest possible price to meet demand
Socialism
• Definition: economic system in
which the factors of production are
owned by the public and operate
for the welfare of all
Socialism
• Grew out of a
concern for social
justice
• Government should
control key
industries to end
poverty and
promote equality
Capitalism
• Individuals &
businesses
own property
& means of
production
(private)
Socialism
• The
community or
state owns
property &
the means of
production
(public)
Capitalism
• Progress
results when
individuals
follow their
own selfinterest
Socialism
• Progress
results when
a community
of producers
cooperate for
the good of all
Capitalism
Socialism
• Businesses
follow their
own selfinterest by
competing for
consumer’s
money
• Socialists
believe that
capitalism
takes
advantage of
the worker
Pizza Anyone?
• Dominos
Pizza
• Papa
John's
Pizza
• Pizza Hut Pizza
Not lovin’ it
Capitalism
Socialism
• Each business
tries to
produce goods
or services that
are better &
less expensive
than those of
competitors
• The community
or state must
act to protect
workers and
consumers
Capitalism
• Consumers
compete to
buy the best
goods at the
lowest prices
Socialism
• Socialists
believe that
capitalism
creates an
unequal
distribution of
wealth
The Ultimate Price?
• The
Ultimate
Price?
U.S. Distribution of
Wealth 2013
Capitalism
Socialism
• Consumer
competition
shapes the
market by
affecting what
businesses
are able to
sell
• Rather than
competition,
goods should
be distributed
according to
each person’s
need
Capitalism
• Gov’t SHOULD
NOT interfere
in the economy
because
competition
creates
efficiency in
business
Socialism
• Gov’t SHOULD
control &
regulate the
economy to
protect
workers &
consumers
Marxism – Radical Socialism
• According to Karl Marx the
economy is a major force for
change
• Change generally occurs through
class struggle
• The “HAVES” v. the “HAVE-NOTS”
Marxism – Radical Socialism
• Throughout history the “HAVES”:
• Control politics &
government
• Create & control
culture
Marxism – Radical Socialism
• As a result of this
influence on society
the “HAVES” have
historically kept
their position on top
of the social
structure
Marxism – Radical Socialism
• Said the large
proletariat would
revolt, seize
factories/mills from
the capitalists, &
produce what
society needs
Time
Period
The
“Haves”
The
“Have-Nots”
Egypt
Pharaohs,
priests, royal
families, etc.
Slaves,
peasants
Upper castes:
priests &
rulers
Lower
castes:
servants &
slaves
India
Time
Period
The
“Haves”
The
“Have-Nots”
Middle
Ages
Nobles,
landowners
Peasants,
serfs
Age of Middle Class
Industry (Bourgeoisie)
Factory
Owners
Factory
workers
(Proletariat)
Communism (in theory)
• Pure Socialism in Marx’s Vision =
Communism
• ALL “HAVES” & NO “HAVE-NOTS”
• Classless
society with
NO gov’t
• All goods &
services
shared equally
In the American System?
• Business can require workers to
work for unlimited hours
• Businesses compete with each
other for customers
• Hiring practices permit
discrimination
• Huge variety of products available
• Individuals can start a business
In the American System?
• Individuals can own a business
• People can improve material
wellbeing through hard work
• Prices vary with availability and
demand
• Production of too many goods
results in discount stores
• Some people do not have health
care
In the American System?
• Unregulated monopolies
• Wages vary according to the
availability of that type of worker
• Workers laid off if demand drops or
business fails
• 40 hour work week
• Bankruptcy laws
In the American System?
• Child labor laws
• Government protection of bank
deposits
• Higher tax rates for wealthier
people
• Government inspection of
meat/restaurants
•
In the American System?
• Medicare
• Minimum wage
• Old age/retirement payments by
the gov’t
• Over-time pay
• Public libraries, parks, & schools
In the American System?
• Workman’s compensation for
injury on the job
• Workplace safety inspection
• No private ownership of the means
of production
• Equal pay for equal work