econ

1. Economic Systems
Capitalism and Socialism

2. Objectives
 I can explain the strengths and weaknesses of different
types of economies

3. Economics
 The study of the production and consumption of goods
and services and the distribution of wealth in a society.
 Production = What businesses make.
 Consumption = Who buys what.
 Distribution = Who is rich and who is poor

4. Capitalism
 Ideas first proposed by Adam Smith (1776)
 “Economic Individualism”

5. Principle 1: Economic
Freedom
 In a world with limited resources…
 Consumers can decide what to buy.
 Producers can decide what they want to make.
 Workers can decide how they want to work.

6. Principle 2: Private Property
 Individuals can own land and means of production.
 Factory Machinery
 Land
 Labor
 Resources
 Individuals can choose how to use their property.
 Limited Government Control

7. Principle 3: Self-Interest
Drives Society
 People will make decisions that benefit themselves…But
that is OKAY!!!!
 If people make a product that people want, they will
make money & people will be happy. Everyone wins!

8. Principle 4: Competition is
Good
 When businesses compete, buyers win!
 Lower Prices
 Inventive/New Ideas --> Progress!!!

9. Principle 5: Prices are
Determined by the Market
 Prices of goods & services are determined by what buyers
are willing to pay for them.
 “Invisible Hand,” Guides Market – Limited Gov.

10. Principle 6: Limited
Government
 Government makes laws to protect individuals and solve
disputes.
 Individuals make economic decisions.
 Does not have influence over the market.
 “Laissez Faire”

11. Your Task…
 Create a visual representation of capitalism.
 Include references to all five key principles

12. Socialism
 An economic principle based on the idea of
communal (all people) or governmental ownership
and administration of means of production.

13. Basic Ideas…
 Government or public owned means of production
 Critical of wealth in the hands of a few
 Redistribution of wealth

14. Rise of Socialism
 Had roots in the Industrial Revolution…
Why might this have occurred?

15. OWNERSHIP
CAPITALISM SOCIALISM
Individuals and
businesses own property
and means of production
The community or the
state own property and
the means of production
and businesses

16. Competition or
cooperation
Capitalism Socialism
Progress occurs when
people compete and
follow their own self-
interests
Progress occurs when
community cooperates
and limit competition

17. Role of Government
CAPITALISM SOCIALISM
Limited Government. Government should
protect the rights of
workers and society. Very
Active Role.

18. Distribution of goods
CAPITALISM SOCIALISM
Individuals earn what they
deserve and should be
able to keep their goods.
Distribute goods and
wealth according to each
person’s needs.

19. What Drives the Market?
CAPITALISM SOCIALISM
Individuals wants. Individuals needs.

20. Your Task…
 Create a visual representation of Socialism.
 Include references to all five elements of Socialism