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Capitalism versus Socialism

Capitalism versus Socialism. The economic system known as capitalism developed gradually over centuries, originating during the late Middle Ages.

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Capitalism versus Socialism

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  1. Capitalism versus Socialism

  2. 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

  3. Capitalism • Definition: economic system in which the factors of production are privately owned & money is invested to make a profit

  4. Capitalism • Adam Smith: wrote The Wealth of Nations • Believed in Laissez-faire economics – gov’t should NOT interfere in a free market

  5. Capitalism • 3 Natural Laws of Economics: • Law of Self-Interest: People work for their own good • Law of Competition: Competition forces people to make a better product • Law of Supply & Demand: Enough goods would be produced at the lowest possible price to meet demand

  6. Socialism • Definition: economic system in which the factors of production are owned by the public and operate for the welfare of all

  7. Socialism • Grew out of a concern for social justice • Government should control key industries to end poverty and promote equality

  8. Socialism Capitalism The community or state owns property & the means of production (public) • Individuals & businesses own property & means of production (private)

  9. Socialism Capitalism Progress results when a community of producers cooperate for the good of all • Progress results when individuals follow their own self-interest

  10. Socialism Capitalism Socialists believe that capitalism takes advantage of the worker • Businesses follow their own self-interest by competing for consumer’s money

  11. Pizza Anyone? • Dominos Pizza • Papa John's Pizza • Pizza Hut Pizza

  12. Not lovin’ it

  13. Socialism Capitalism The community or state must act to protect workers and consumers • Each business tries to produce goods or services that are better & less expensive than those of competitors

  14. Socialism Capitalism Socialists believe that capitalism creates an unequal distribution of wealth • Consumers compete to buy the best goods at the lowest prices

  15. The Ultimate Price? • The Ultimate Price?

  16. U.S. Distribution of Wealth 2013

  17. Socialism Capitalism Rather than competition, goods should be distributed according to each person’s need • Consumer competition shapes the market by affecting what businesses are able to sell

  18. Socialism Capitalism Gov’t SHOULD control & regulate the economy to protect workers & consumers • Gov’t SHOULD NOT interfere in the economy because competition creates efficiency in business

  19. 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”

  20. Marxism – Radical Socialism • Throughout history the “HAVES”: • Control politics & government • Create & control culture

  21. Marxism – Radical Socialism • As a result of this influence on society the “HAVES” have historically kept their positionon top of the social structure

  22. Marxism – Radical Socialism • Said the large proletariat would revolt, seize factories/mills from the capitalists, & produce what society needs

  23. Slaves, peasants • Lower castes: servants & slaves

  24. Nobles, • landowners • Factory workers (Proletariat)

  25. 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

  26. 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

  27. 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

  28. 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

  29. In the American System? • Child labor laws • Government protection of bank deposits • Higher tax rates for wealthier people • Government inspection of meat/restaurants

  30. In the American System? • Medicare • Minimum wage • Old age/retirement payments by the gov’t • Over-time pay • Public libraries, parks, & schools

  31. 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

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