Capitalism vs. Socialism

Definition of Capitalism Capitalism is… an economic system in which people make the economic decisions in free markets (not controlled by the government) an economic system in which people make the economic decisions in free markets (not controlled by the government) Productive resources are privately owned Productive resources are privately owned

Definition of Socialism Socialism is… A partial command system in which the government influences many economic decisions. A partial command system in which the government influences many economic decisions. Basic productive resources are government owned; the rest are privately owned Basic productive resources are government owned; the rest are privately owned

Definition of Communism Communism is… Communism is… A command system in which the central government directs all major economic decisions. A command system in which the central government directs all major economic decisions. The government owns and completely controls resources The government owns and completely controls resources Supposedly the government will eventually not be needed to regulate this after a while… Supposedly the government will eventually not be needed to regulate this after a while…

Characteristics of Capitalism Private Ownership-citizens may own property and businesses, etc. Private Ownership-citizens may own property and businesses, etc. Individual Initiative-citizens are driven to begin business based on their “individual initiative”—they are driven by the desire to be successful and get rich Individual Initiative-citizens are driven to begin business based on their “individual initiative”—they are driven by the desire to be successful and get rich

Competition-several sellers of a product or service Competition-several sellers of a product or service Rewards efficient businesses Rewards efficient businesses Assures that consumer will get products of good quality at low prices. Assures that consumer will get products of good quality at low prices. Monopolies Monopolies Freedom of Choice-consumers can buy what they want from any company they want Freedom of Choice-consumers can buy what they want from any company they want

Profit or Loss Profit or Loss Profit-the difference between the amound of money used to operate a business and the amount of money the business takes in. Profit-the difference between the amound of money used to operate a business and the amount of money the business takes in. Profit motivates people to start businesses and improve products Profit motivates people to start businesses and improve products People like money… People like money…

Pros and Cons of Capitalism Pros Competition to provide goods and services keeps prices low Competition to provide goods and services keeps prices low Rewards hard work Rewards hard work Provides choice Provides choice Allows for the building up of wealth and possessions Allows for the building up of wealth and possessions Consumers regulate the market Consumers regulate the market Cons Exploits people who cannot compete Uneven distribution of wealth Creates a money-oriented society Constant economic growth may deplete the earth’s resources

Mixed Economy Mixed economy is: Modified Capitalism Modified Capitalism The government assumes responsibility for certain areas of the economy such as The government assumes responsibility for certain areas of the economy such as Housing, transportation, health, education, and welfare. Housing, transportation, health, education, and welfare.

Government subsidized programs Postal service Postal service Rail lines Rail lines Libraries Libraries Health care Health care Social programs Social programs Roads Roads Infrastructure (bridges, freeways, etc.) Infrastructure (bridges, freeways, etc.) Can you think of any others? Can you think of any others?

Which is best: Capitalist economy, Socialist economy, communism or a Mixed economy?