Economic Theories

Economics Economics – “The study of human efforts to satisfy seemingly unlimited wants through the use of limited resources” (p. 26) What How Who

Capitalism (yay!) “Free Enterprise” - “Gov't puts no limits on freedom of buyers and sellers to make economic decisions” (p. 27) Privatized Free enterprise Competition Freedom Potential profits

Capitalism (yay!) People work to gain/acquire This is different from... Wealth should be used aggressively

Capitalism (yay!) Adam Smith & laissez-faire Scottish philosopher Wrote, “Wealth of Nations”

Capitalism (yay!) What does Capitalism need to survive? Capitalism requires... People to make decisions Competition to be present

Capitalism (yay!) History (double yay!!) United States is prime example of successful capitalism... ...but are we pure? Government doesn't get too involved in private business... ...or does it? ”

Capitalism (yay!) Government expansion Protection Acts Economic Disasters ”

Capitalism (yay!) Mixed-Market Economy Free Enterprise combined with government decisions Still considered capitalistic system because of an emphasis on individual freedom ”

Socialism Public or collective ownership of the means of production Equality over achievement Input over Output While capitalism is based on a price system, profit and loss and private property rights, socialism is based on bureaucratic central planning and collective ownership. Proponents of socialism believe that it creates equality and provides economic security and that capitalism is an inferior system that exploits workers for the benefit of a small, wealthy class. Critics of socialism believe that it is based on faulty principles and ignores human nature and the role of incentives in economic transactions. ”

Socialism Three gooooooooals Distribute wealth and economic opportunity equally Society controls economic/production decisions Public owns factories While capitalism is based on a price system, profit and loss and private property rights, socialism is based on bureaucratic central planning and collective ownership. Proponents of socialism believe that it creates equality and provides economic security and that capitalism is an inferior system that exploits workers for the benefit of a small, wealthy class. Critics of socialism believe that it is based on faulty principles and ignores human nature and the role of incentives in economic transactions Democratic Socialism – Government owns means of production. ”

Communism One class would emerge in a Communist system Command Economy – all decisions are made by government planners ”