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The Three Economic “Isms”. Capitalism Communism Socialism. Industrialization Leads to New Economic Philosophies. Industry. Industry-- Factories. Railroads. Capitalism. Capitalism– ex. U.S.A. Laissez-faire Individual choice/ freedom of choice Individuals run the business

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The Three Economic “Isms”

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the three economic isms

The Three Economic “Isms”




  • Capitalism– ex. U.S.A.
    • Laissez-faire
    • Individual choice/ freedom of choice
    • Individuals run the business
    • Economic Classes: Rich and poor and middle-class
    • Competition makes goods better and cheaper
    • Government: Democracy
history of capitalism
History of Capitalism
  • Result of absolutism and mercantilism
  • Adam Smith (Enlightened economist)
  • Industrialization
  • Britain, U.S. “laissez-faire”
  • Government and Economy of the people
socialism doesn t really exist
Socialism– doesn’t really exist
  • Everyone agrees to share economy
  • Everyone is equal in terms of money
  • Each person will receive money according to how much they need
  • No competition
  • Social Classes: NONE
  • Government: Should be democracy, but dictator never stepped down
why no socialism
Why no Socialism?
  • In history, the dictator had NEVER stepped down!
  • Problem with Marx’s theory, he didn’t take in to account the nature of man
  • Communism-- ex. N. Korea & Cuba
    • Government controlled Economy
    • Government controls all business decisions
    • No competition
    • Economic Classes: Rich government and Poor citizens (proletariat)
    • Government: Dictator
history of communism
History of Communism
  • Industrialization led to 2 social classes
    • Proletariat (working poor)
    • Bourgeoisie (wealthy Industry owners)
the 2 classes clash
The 2 classes Clash
  • Karl Marx theorized that the Proletariat would rise up against the Bourgeoisie in a civil war– Have’s vs. Have Not’s
  • Bourgeoisie would lose because they are much smaller
  • Proletariat would require a dictator to control the chaos that follows a civil war
  • Dictator would step down
  • Socialism would ensue
  • The end of social classes
russian revolution
Russian Revolution
  • 'Working people arise!'
the communist manifesto
The Communist Manifesto

Seven Stages to the Establishment of Communism/ Socialism

  • Historical Materialism
  • Theory of Surplus
  • Stages in Economic Development
  • Class Struggle
  • Use of Force
  • Dictatorship of the Proletariat
  • Establishment of Communism/ Socialism
historical materialism
Historical Materialism
  • Marx Theory: Events and Institutions are based on economic forces. The dominant economic class determines the rules and moral of Society.
  • Objections to Marx: Too simple an explanation. Many other factors determine laws and morals; i.e. Catholic Church
theory of surplus
Theory of Surplus
  • Marx Theory: Value of goods is based only on the labor of the workers. What they produce is sold for far more than they can make; the result= rich gets richer, poor gets poorer.
  • Objections to Marx: Other factors add to the value of a product; materials, factories, ideas to help produce goods. In U.S. and Europe the poor is not getting poorer because of unions and labor laws.
stages in economic development
Stages in Economic Development
  • Marx Theory: There are 5 stages, each superseding the previous stage. Therefore, eventually, Socialism will override Capitalism.

Five Stages:

Communal, Slave, Feudalist, Capitalist, Socialist

  • Objections to Marx: The stages did not go in order in every culture, ex. China and Japan. There is no proof that Capitalism must fail, or that the next stage would be Socialism.
class struggle
Class Struggle
  • Marx Theory: Historically, there are opressors and oppressed; bourgeoisie and proletariat. As bourgeoisie grow smaller and powerful, proletariat are treated worse causing them to rise-up.
  • Objections to Marx: Marx did not consider the middle class when developing his theory. He made the assumption the middle class would be with the proletariat.
use of force
Use of Force
  • Marx Theory: With the exception of some highly advanced democracies; i.e. the U.S. and G.B., force would be necessary to achieve socialism.
  • Objections to Marx: Changes can be made peacefully.
dictatorship of the proletariat
Dictatorship of the Proletariat
  • Marx Theory: After the force (civil war/ revolution) a dictator will arise briefly until opposition is ended. Then classes will be abolished and a class-less society will emerge.
  • Objections to Marx: Dictatorships do NOT end! This results in a “new” class that is similar to the bourgeoisie, and again proletariat are treated poorly. Ex. U.S.S.R., 50 + Years with a dictator.
establishment of communism socialism
Establishment of Communism/ Socialism
  • Marx Theory: During the Dictatorship, communism is established.
    • Public ownership of production, distribution and consumption; eliminating competition and classes, No more class struggle.
    • Work to ability and receive according to NEED.
  • Objections to Marx: How do you determine need? Communists governments are strengthening with more regulations, not becoming socialist.