??What you should know?? 1.Name a type of government that usually uses a command system of economics? 2. Who owns and operates most business in a command style economy? 3. ANALYZE – Which is more important to MARX, capital or labor? WHY?

Command Systems (aka: Communism Centrally Planned Economy)

Why did some people dislike capitalism (During Ind Rev)? Few were rich (Upper Class and Middle Class), most were poor (Working Class) Few were rich (Upper Class and Middle Class), most were poor (Working Class) Upper classes received big profits, workers made a wage. Who worked harder? Upper classes received big profits, workers made a wage. Who worked harder? VS.

Karl Marx laborers Without the hard work of laborers, owners wouldn’t have a profit!

Marx’s steps toward a just society Step 1 >>>>>>> Step 1 >>>>>>> Step 2 >>>>>>> Step 2 >>>>>>> Step 3 >>>>>>> Step 3 >>>>>>> Step 4 >>>>>>> Step 4 >>>>>>> Traditional Economy Traditional Economy Market Economy Market Economy –Capitalism Socialism Socialism –First stage of Comm. **COMMUNISM** **COMMUNISM** You must go through each step to achieve COMMUNISM. It is the best economy.

SOCIALISM SOCIALISM Is considered a MIXED economy; Government owns some production and people can too. Where the government owns many of the major means of production. Where the government owns many of the major means of production. –Telephone, Water, Automobiles, Air Travel, Medical Coverage It is not Communism! It is not Communism! You can still have a small business that does not compete with the Government. You can still have a small business that does not compete with the Government. If you get sick, go the hospital. You get better, you leave and are not billed!! If you get sick, go the hospital. You get better, you leave and are not billed!! –You pay for it with taxes. –All get Medical Coverage (EX.) Great Britain, Canada, Holland, Germany, France, Switzerland, Denmark, Sweden.

Proletariat Proletariat = WORKERS Bourgeoisie Bourgeoisie = Rich business owners !!REVOLT!! Marx said the workers would rise up and take over the Bourgeoisie. !!REVOLT!! Versus

The Soviet Union - - Led by Vladimir Lenin The revolt would lead to…. COMMUNISM

Command System An economic system in which the government owns factors of production An economic system in which the government owns factors of production Everyone shares profits, not just Everyone shares profits, not just factory owners factory owners

Command Economies Also called Socialist, Communists or Centrally Planned Economies. Also called Socialist, Communists or Centrally Planned Economies. If you have more than your neighbor, you should give some to your neighbor so that you both have the same amount. If you have more than your neighbor, you should give some to your neighbor so that you both have the same amount. “Take from the rich (taxes) give to the poor (welfare) so everyone is equal”…..but are they really????? “Take from the rich (taxes) give to the poor (welfare) so everyone is equal”…..but are they really?????

Private Property In a command economy private property does not exist In a command economy private property does not exist Everything is owned by the gov’t Everything is owned by the gov’t Take from the rich, give to the government, they give it to the poor, so everyone is equal Take from the rich, give to the government, they give it to the poor, so everyone is equal NO

Competition/Entrepreneurship NO competition NO competition There is NO need for entrepreneurship There is NO need for entrepreneurship People DO NOT own businesses, the government does! People DO NOT own businesses, the government does!

Consumer Choice Limited to the businesses owned by the government (gov’t). Limited to the businesses owned by the government (gov’t).

WHAT is produced? Government economic leaders give businesses quotas that they have to meet Government economic leaders give businesses quotas that they have to meet Quota- The amount of a good/service a business must produce Quota- The amount of a good/service a business must produce

HOW is it produced? Government owned businesses are given quotas Government owned businesses are given quotas Goods/services are shipped off to gov’t owned stores to be sold Goods/services are shipped off to gov’t owned stores to be sold Gov’t determines pricing for goods/services Gov’t determines pricing for goods/services Gov’t decides how workers talents are to be used Gov’t decides how workers talents are to be used Everyone works according to their abilities and receives according to their needs Everyone works according to their abilities and receives according to their needs

FOR WHOM is it produced? The idea is for everyone to have their needs taken care of... However this is not always the case. The idea is for everyone to have their needs taken care of... However this is not always the case.

Command Economies Advantages Everyone works together for a common goal Everyone works together for a common goal Increase in employment Increase in employment Countries can industrialize quickly Countries can industrialize quickly Disadvantages The gov’t sets prices not cost of production The gov’t sets prices not cost of production No time for high quality products. Make what gets you by. No time for high quality products. Make what gets you by. No consumer demand No consumer demand Poor motivation by workers to work harder (they never get raises) Poor motivation by workers to work harder (they never get raises)

Market Vs Command Systems Advantages of market systems Advantages of market systems –eg: economic freedom, efficiency etc Disadvantages of market systems Disadvantages of market systems –eg: unequal distribution of income and wealth (rich get richer, the poor get poorer) Advantages of command systems Advantages of command systems –eg: Equity (no classes-no rich no poor) Disadvantages of command systems Disadvantages of command systems –eg: inefficiencies and waste

Mercantilism ~ Where your country exports more than it imports and uses tariffs to create a favorable balance of trade. >>>>>>High government intervention.

??What you should know?? 1.Name a type of government that usually uses a command system of economics? 2. Who owns and operates most business in a command style economy? 3. ANALYZE – Which is more important to MARX, capital or labor? WHY?