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.