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Name _____________________ Date _________ Per _____ Capitalism/Communism/Socialism Notes
Agree/Disagree: “The economy runs best when the government stays out of business.” Agree Disagree
-When the economy runs freely, it flourishes and grows and helps everyone-Regulation slows economy down-“Invisible hand” - economy will regulate itself EX: Prices will go up with demand, down with less demand-Competition is good: strong companies will survive, weak will divide
-Regulation is sometimes necessary to stop financial crashes (like our recent recession)-The invisible hand acts over a long time; whereas govt. can produce immediate responses.-Govt. needs to protect workers with minimum wage/max working hours
Adam Smith & Capitalism Wrote the Wealth of Nations which argues that the old
economic system of mercantilism actually hurt the economy. Mercantilism placed tariffs (taxes) on any foreign good
traveling into a country. Therefore, it was more expensive for that person to buy and they would buy goods from their own country. But, what problem did this create?Other countries would respond by putting taxes on English goods
Capitalism was created and began to be practiced in England where free trade was encouraged (no extra taxes) and the government should stay away from business.During the Industrial Revolution, was it good for the government to stay away from business?
Robert Owen & Socialism Believed that workers needed to be protected and provided
for by the government because no one else was doing it. Socialism was invented that argued if the government
owned all the natural resources, banks, and basic industry, then the basic needs of the people would be easily met.
Small local communities would set up public kitchens and give people jobs in the major industries, but people could still work outside the homes trading things
Karl Marx & Communism German who continued the ideas of Robert Owen but more
radical Invented COMMUNISM which argued that the government
should take contol of ALL the industry He argued that eventually, the workers would violently revolt
against the middle class (called the bourgeoisie), abolish superstitious religion, and make a strong central government that provided everyone with a job and a set wage.
Economic Systems Activity Conclusions: Communism/socialism makes sure everyone is provided for; but at the same
time it kills motivation. Why work hard if you’re not be a billionaire. Kills creativity.
Capitalism is dog eats dog; there are winners and losers
Role of Govt. Goal HowMercantilism Large Make Mother Country
RicherLarge tariffs (taxes) on an y foreign good
Capitalism Little Make Mother Country Richer
Free trade
Socialism Large Guarantee a good wage to every person
Govt. owns all natural resources, banks, basic industry
Communism Large Guarantee a good wage to every person
Socialism + violent revolution + no religion + more developed political structure
Closer: Capitalism or Communism? ____________(1) The economy runs best when the govt. allows business to do whatever they please.____________(2) Even though companies will lose profit, they should be forced to pay every worker a living wage no matter how hard they work.____________(3) The primary goal of a country should be to make as much $ as possible because then that money will eventually trickle down and improve the welfare of all its people.(4) Using the chart above, what are the major differences between socialism and communism?
(5) What two economic systems are the most similar? Explain.
(6) What two economic system are the most different? Explain.
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