What is an Economic System? • An economic system is how goods and services are produced and distributed in an economy.
Exploring Economic Systems • I am going to give everyone some candy, and we are going to use this candy to explore “economic systems”—or, different ways to get what you want/need • Rules: • You CANNOT eat the candy until I tell you to (you’ll get a chance later) • Your goal is to get as much of the candy that you want. • We will run through this simulation 3 times, each with slightly different rules. Pay close attention so that you don’t miss new instructions!
SCENARIO 1 • I will pass out candy • Once everyone has candy, go around the room and play Rock, Paper, Scissors: • Play each person best out of 3 – loser has to give up a piece of candy • Once you run out of candy, you must sit down. • You may rotate to different people until the timer stops
Capitalism • Questions: • How much candy did people get to start with? • What did you try to do? • How did you try to get more candy? • What did I do? • Where do you see this kind of economic system today?
Capitalism • Definition: Economic system in which money is invested in business ventures with the goal of making money • Role of the Government: Laissez-faire • The government shouldn’t step in for any reason, including laws for better wages or working conditions • Private Ownership • Freedom of Competition • Unequal economic classes
Capitalism • Positives • Private ownership • Entrepreneurial opportunities • Freedom of competition • Better goods at better prices • Helped middle class grow • Fueled the industrial revolution • Increased standards of living (for some) • Negatives • Only a few grew rich – unequal economic classes • No labor laws • People grew upset with working conditions and unequal distribution of wealth, so they searched for other solutions
SCENARIO 2 • Rules: • You STILL cannot eat the candy • Place your candy on the table in front of you: I have to do some redistributing. Listen while I do so.
Questions • How much candy were you all given at the beginning? • How did you get more? • Was the system fair? • How would this idea be a solution to Capitalism?
Socialism • Definition: an economic system in which the government controls things and gives them out as needed.
SCENARIO 3 • Rules: • You still CANNOT eat the candy • Place all the candy at the center of your table • As a class, you all must decide how to distribute the candy • You only have 2 minutes! Go!
Questions • What did I do with the candy? • How was the candy distributed? • Was it equal? • Who did I represent? • Do you think this system would work in our country today?
Communism • An economic system in which the people own all aspects of business and share all goods and services • Socialism and Communism were created in response to the injustices of capitalism • Positives • People work for the good of all • Attempt to redistribute wealth • Negatives: • Inefficient businesses • No price competition
Important Economic Thinkers • Adam Smith • Wrote The Wealth of Nations about the theory of capitalism • Believed in laissez-faire (hands off) economics. (The government shouldn’t interfere.) • Karl Marx (and FriederichEngles) • Wrote Communist Manifesto and Das Kapitalin 1848 • Believed the world has always been divided into the “haves” and the “have nots” • Rich were growing richer and the poor poorer—this was BAD • Communism was their solution to Capitalism
QUICK WRITE • To wrap up our discussion of the Industrial Revolution, you will write a letter to a friend explaining to them your experiences of the Industrial Revolution and the economic systems. • Step 1: I will assign your identity: a factory worker, a leader in the government, or a businessman • Paragraph A: How did the Industrial Revolution change the way the economy worked in England? • Things to consider • How were goods made before and after? • Who had the money before and after? • Paragraph B: What economic system do you see developing around you, and how does it affect you? • Paragraph C: Which economic system (capitalism, communism, and socialism) do you feel would be the most beneficial to you and why?