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Explore the various economic systems, including Capitalism, Communism, Traditional, Mercantile, and Manor, and learn about their key features, control mechanisms, and societal impacts.
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Capitalism • Closest real-life economy to the market model • Authored by Adam Smith in his book The Wealth of Nations • Based upon the concept of Laissez Faire (Hands off) – Government should play as little a role in the economy as possible
Private Ownership • In Capitalism people control the MOP and MOD • Private consumers (people) own businesses • These people are called entrepeneurs
Profit Motive • Entrepreneurs are in business to make money • Money earned in a business is referred to as profit • Businesses must offer a quality product for a reasonable price if they want to turn a profit.
Self Interest • People are going to do what’s best for them and their families • Thus they will buy the cheapest goods provided they are of decent quality
Communism • Economic philosophy founded by Karl Marx • Marx wrote about Communism in The Communist Manifesto • Marx believed that Capitalism was an economic system that only benefitted rich entrepreneurs and the common worker was overlooked
Proletariat • Marx referred to the working class as the Proletariat • He believed that some day they would band together and revolt against rich factory owners
Government Control • In a pure Communist society, the government controls all factors of production • The government owns businesses and the people work for it • All aspects of the economy are controlled and regulated by the government.
The Goal of Communism • Marx’s goal in communism was the creation of a classless society. • If there were not social classes, people would all get along • There would be no class struggles
Traditional Economies • Self-Sufficiency – People only produce goods for immediate use in their village. Everything they need, they provide. No Trade • Subsistence Agriculture – People grow only what they need for consumption. No surplus.
Mercantile Economy • Mother Country – A strong, usually industrialized country, who takes over colonies for its own gain • Colony – A weaker nation or region that is used to gain wealth for the mother country
Manor Economy • Usually found in feudal societies • People are divided into rigid social class. Each class has its own role in the economy • People work together to provide for the needs of the manor. They barter goods and services within the manor.
