Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 Capitalism, Socialism, and Democracy Coherencies and Contradictions.

Similar presentations


Presentation on theme: "1 Capitalism, Socialism, and Democracy Coherencies and Contradictions."— Presentation transcript:

1 1 Capitalism, Socialism, and Democracy Coherencies and Contradictions

2 2 Capitalism & Democracy Inherently linked? Inherently linked? No! No! Capitalism also linked to non-democratic regimes (e.g. China). Capitalism also linked to non-democratic regimes (e.g. China).

3 3 Socialism & Democracy Mutually exclusive? Mutually exclusive? No! No! Most European Countries are “social” democracies not to mention that the United States has many elements of social democracy. Most European Countries are “social” democracies not to mention that the United States has many elements of social democracy.

4 4 1) Democratic Capitalism Capitalism= Economic system based on private property and free markets. Capitalism= Economic system based on private property and free markets.

5 5 Traditional Capitalism Also known as: “Free Market” or “laissez-faire” Capitalism and has five components: Also known as: “Free Market” or “laissez-faire” Capitalism and has five components: 1. Private ownership of property 2. No legal limit on accumulation of property. 3. Free Market-no government intervention in the economy 4. Profit motive as driving force. 5. Profit as measure of efficiency

6 6 Adam Smith ( ) Intellectual Father of Capitalism who said: Intellectual Father of Capitalism who said: 1. Humans motivated by self interest. 2. Should be free to pursue profits. Result: “The Invisible Hand.” Result: “The Invisible Hand.” 1. Efficient economic system; all will benefit because goods will be produced and sold cheaply.

7 7 Capitalism Vs. Feudalism Capitalist entrepreneurs had to organize to fight against the system of their time, Feudalism. Capitalist entrepreneurs had to organize to fight against the system of their time, Feudalism. Feudalism was the economic system derived from Monarchical and Aristocratic society. Feudalism was the economic system derived from Monarchical and Aristocratic society. Serfs or Peasants were allowed to work the land but a percentage of their labor went to the king, noble, or lord who owned the land. Serfs or Peasants were allowed to work the land but a percentage of their labor went to the king, noble, or lord who owned the land.

8 8 Capitalists as Radicals Feudalism was inefficient, did not promote economic growth because there was no private property. Feudalism was inefficient, did not promote economic growth because there was no private property. Capitalists organized, started social movements based upon the ideas of Adam Smith: Private property, government non- intervention. Capitalists organized, started social movements based upon the ideas of Adam Smith: Private property, government non- intervention.

9 9 Late 19 th and Early 20 th Century Changes to capitalism as a result of criticism. Changes to capitalism as a result of criticism. Some regulation of the economy Some regulation of the economy

10 10 Mixed Economy: Rise of the Welfare State Main Catalyst: The Great Depression ( ) Main Catalyst: The Great Depression ( ) Key Presidents: FDR, LBJ, and Nixon. Key Presidents: FDR, LBJ, and Nixon. Specific areas: retirement, health, unemployment, education. Specific areas: retirement, health, unemployment, education.

11 11 Arguments for Mixed Economy John Maynard Keynes ( ): argued that depressions can be avoided if government pumps money into the economy to eliminate unemployment. Also argued for government role in building a social security system and regulate business. John Maynard Keynes ( ): argued that depressions can be avoided if government pumps money into the economy to eliminate unemployment. Also argued for government role in building a social security system and regulate business.

12 12 Who Else uses Mixed Economy? Japan, most European countries built welfare states. Japan, most European countries built welfare states. Why? Why? Eliminate antagonistic relationship between business and labor through government mediation = corporatism. Eliminate antagonistic relationship between business and labor through government mediation = corporatism.

13 13 Welfare System Two types of assistance: Two types of assistance: 1. Need-based: Food stamps, aid to families with dependent children, unemployment. 2. Non-need based: pensions, social security.

14 14 Response to criticism: Welfare system does give away money. Welfare system does give away money. But, they are supposed to ease tension and inequality. But, they are supposed to ease tension and inequality.

15 15 Perpetuates Dependence May be true to some extent, but what is the alternative? May be true to some extent, but what is the alternative? Minimum wage jobs? Minimum wage jobs? Supposed to help people subsist at a minimum level. Supposed to help people subsist at a minimum level.

16 s & 1990s Return to free market principles (Reagan). Return to free market principles (Reagan). Dismantling of Welfare state. Dismantling of Welfare state. Cut taxes. Cut taxes. Massive Government Debt. Massive Government Debt.

17 17 Capitalists & Democracy Capitalists argue that democracy requires capitalism because of freedom to accumulate. Capitalists argue that democracy requires capitalism because of freedom to accumulate. Private property is highest value (economic freedom). Private property is highest value (economic freedom). Economic freedom exists when government and monopolies are checked. Economic freedom exists when government and monopolies are checked.

18 18 Monopolies Give too much power to business (J.P. Morgan). Give too much power to business (J.P. Morgan). Reduce competition (Bill Gates). Reduce competition (Bill Gates). Eisenhower’s warning: Military Industrial Complex; creation of a power elite (military, corporate, government). Eisenhower’s warning: Military Industrial Complex; creation of a power elite (military, corporate, government). Result: Collusion of Interest Result: Collusion of Interest

19 19 Economic Freedom Problem for small businesses? Problem for small businesses? Many hurdles. Many hurdles. Working hard often not enough. Working hard often not enough. Problem of equality of opportunity (race and gender barriers). Problem of equality of opportunity (race and gender barriers).

20 20 Critics of Democratic Capitalism Focus on extremes of poverty and wealth Focus on extremes of poverty and wealth And, Influence of wealth on political process And, Influence of wealth on political process And, Power differentials between employers and employees. And, Power differentials between employers and employees. They say: capitalism produces inequality of wealth and power. They say: capitalism produces inequality of wealth and power.

21 21 The answer: Private property must be checked. Private property must be checked. What are the effects on the community if not? What are the effects on the community if not?  Outsourcing, factory closures  Must be accountability of economic power to the people (political power)

22 22 Too much Capitalism Results: Profit motive strengthens selfishness Profit motive strengthens selfishness Loss of community values of cooperation Loss of community values of cooperation Free Market allows rich to accumulate without responsibility to community (Multinational Corporations). Free Market allows rich to accumulate without responsibility to community (Multinational Corporations).

23 23 Democratic Socialism (Social Democracy) Characterized as follows: Characterized as follows: a) much property held by the public through democratically elected government, including major industries, utilities, and transportation systems; b) a limit on the accumulation of private property; c) government regulation of the economy; d) extensive publicly financed assistance and pension programs; e) social costs added to financial considerations as measure of efficiency.

24 24 History of Socialism Response to the Industrial Revolution Response to the Industrial Revolution 1. Working conditions, living conditions, pay. Christianity: sharing, community, cooperation. Christianity: sharing, community, cooperation.

25 25 Revolution or Evolution? Marx argued for revolutionary transition to socialism (communism) through workers’ revolution. Marx argued for revolutionary transition to socialism (communism) through workers’ revolution. Later, others argued for reform through elections. Later, others argued for reform through elections.

26 26 Assumptions Citizens ought to control political and economic life. Citizens ought to control political and economic life. Should be democratic accountability. Should be democratic accountability. If people control economic system then more equality and less poverty will follow. If people control economic system then more equality and less poverty will follow. Limited Private Property. Socialists are not against private property, but are in favor of government regulation. Limited Private Property. Socialists are not against private property, but are in favor of government regulation.

27 27 Government and Economy Monarchy (one)  Dictatorship Aristocracy (few)  Oligarchy Democracy (many)  Tyranny Free Market (Pure form: Market rules) Democratic Capitalism (hybrid) Democratic Socialism (hybrid) Command Economy (pure form: State rules)

28 28 Socialism and Democracy Politics and economics are connected. Politics and economics are connected. People should decide the direction of the economy. People should decide the direction of the economy. Community should benefit, not just a few individuals. Community should benefit, not just a few individuals.

29 29 Continued Profit motive (self-interest) goes against the interests of the community. Profit motive (self-interest) goes against the interests of the community. Liberty requires economic security (remember “positive liberty”). Liberty requires economic security (remember “positive liberty”).

30 30 Continued Welfare/Social Security (high taxes on rich): Welfare/Social Security (high taxes on rich): Typical democratic socialist welfare system (Sweden) includes extensive medical care system (free or minimal costs), prenatal care for expectant mothers, sabbatical leave for mothers (full pay); Typical democratic socialist welfare system (Sweden) includes extensive medical care system (free or minimal costs), prenatal care for expectant mothers, sabbatical leave for mothers (full pay); unemployment benefits and retraining programs, free public education; unemployment benefits and retraining programs, free public education; workers’ representation on boards of corporations; rent subsidies. workers’ representation on boards of corporations; rent subsidies.

31 31 Criticisms Problem of bureaucracy, accountability. Problem of bureaucracy, accountability. High cost High cost Corruption Corruption

32 32 Response Ombudsman: hears complaints about bureaucracy  Ombudsman: hears complaints about bureaucracy  tries to correct inefficiencies, corruption etc (like an “independent commission”). tries to correct inefficiencies, corruption etc (like an “independent commission”).

33 33 More Criticisms Free market of competitive capitalism is essential for efficient production and distribution of goods. Free market of competitive capitalism is essential for efficient production and distribution of goods. Interference with free market through government ownership and control puts too much power in the hands of government  destruction of freedom and democracy  but the electoral process is still there. Interference with free market through government ownership and control puts too much power in the hands of government  destruction of freedom and democracy  but the electoral process is still there. Human Nature acts against socialist idealism. Human Nature acts against socialist idealism.

34 34 Current Trends Supply-side economics argues that government should only control the supply of money in the economy to keep inflation low  government borrowing main source of inflation (monetarism). Supply-side economics argues that government should only control the supply of money in the economy to keep inflation low  government borrowing main source of inflation (monetarism).

35 35 More Trends Welfare policies drain money from private investments (taxes) that would otherwise create more jobs  reduction of government spending. Welfare policies drain money from private investments (taxes) that would otherwise create more jobs  reduction of government spending. Problem: unemployment, social inequality. Problem: unemployment, social inequality. Socialists argue that social costs must be included in cost of doing business. Socialists argue that social costs must be included in cost of doing business. Problem: profits. Problem: profits.

36 36 Other Socialist Ideas 1. Market Socialism or “Third Way” 2. Developmental Socialism 3. Economic Democracy 4. Communal Living 5. Cooperatives

37 37 Recent Policy Issues: Deregulation: Enron, Anderson Deregulation: Enron, Anderson Relinquishing government oversight of the economy. Core idea: over regulation has forced inefficiencies on the economy  correction is needed. Relinquishing government oversight of the economy. Core idea: over regulation has forced inefficiencies on the economy  correction is needed. Problems: 1) lowering of health and safety standards for workers; 2) Savings and Loan disaster; 3) product quality Problems: 1) lowering of health and safety standards for workers; 2) Savings and Loan disaster; 3) product quality


Download ppt "1 Capitalism, Socialism, and Democracy Coherencies and Contradictions."

Similar presentations


Ads by Google