Note Guide: Capitalism, Communism, Socialism

I.) Capitalism

A.) Capitalism and capitalists 1.) Capital = economic wealth 2.) Capitalist = one who risks his/her capital in the hopes of making a profit

B.) Basic Principles of Capitalism

1.) ___________________= one may do what they choose with their capital free enterprise

2.) ________________= the reason one engages in business is to make a profit profit motive

3.) ________________= the rivalry to sell products creates improved quality & lower prices competition

C.) Other capitalist concepts 1) "Voting with dollars" - what consumers buy determines what will be made 2) Supply & Demand – prices vary based on availability and desire for the product

3.) Laissez faire a.) developed by Adam Smith ("The Wealth of Nations") b.) government should not interfere with business

Karl Marx II.) Communism (sometimes referred to as Marxism)

A.) Definition = An economic and social system in which all property is owned by the "people" and all goods and services shared [ A “command economy” or state-run economy]

B.) "Communist Manifesto" & "Das Kapital" 1.) books by Karl Marx & Friedrich Engles Fredrich Engles

2.) Basic principles (Marxist theory) a.) Economic conditions determine history

b.) Class struggle 1.) Capitalist gain profits by exploiting workers

c.) Capitalism will collapse due to worker revolt

C.) Brought into power by revolution

LIBERTY D.) Revolution followed by a dictatorship ("dictatorship of the proletariat")

III.) Socialism A.) Major means of production are controlled by the government

B.) Intention is to improve conditions for workers and increase efficiency C.) Brought into power through orderly process (evolution) (ex: an election)

D.) Socialists believe society is better off if the government actively plans the economy rather than depending on the free-market.

 Socialism is state control of key industries (factories, mines, railroads, …)  Communism is “complete or total socialism” (total state control)

“A farmer has 2 cows…”  Socialism: Keep 1 cow & give 1 to the government Communism: Give both cows to the government Capitalism: Keep 1 cow & trade the other for a bull

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