1. Who’s the man with the economic plan?
Adam Smith vs Karl Marx
Who’s the man with the economic plan?

2. Adam Smith
individuals own the means of production (factories, machines, land) and reinvest profits as capital to expand business
Capital – wealth that is invested in order to create more wealth

3. Adam Smith- The Wealth of Nations
Laissez-faire- (let do) non-interference of the government in business THE INVISIBLE HAND….
HANDS OFF!

4. The Invisible Hand and…
Minimum Wage
Price Controls
Environmental Protection
Child Labor
Discrimination
There would be no laws! Hands off!

5. Capitalism
Free Market Economy – One in which consumer choice, the law of supply and demand and competition drives companies decisions regarding what products to produce and the prices of those products.

6. Adam Smith 3 Laws
Law of Competition

7. Law of Self Interest

8. Law of Supply and Demand

9. Socialism: (R. Owen)
A theory or system of social organization that promotes:
that the community as a whole should own and control of the means of production (factories / land)
profits from production should be divided amongst the community as a whole

10. Socialism Continued: Believe capitalist take advantage of workers
Community or state (gov’t) must act to protect workers
Unequal distribution of wealth is unfair (caused by capitalism)
Goods should be divided according to each person’s needs

11. Karl Marx The Communist Manifesto
Radical Socialism or Marxism
Workers will seize control of the government and businesses

12. Then what… Redistribute profits equally (share the wealth equally)
Own all property in common (no private property)

13. Socialism  Communism
“From each according to his ability, to each according to his need” (all must work, all share in profits)
Economic equality (no more classes)
No government or police would be needed in a community of equals where all is shared government would fade away  Communism

14. “Communist” Countries Today
“Communism” = Dictatorship
never moved passed Marx’s Dictatorship of the Proletariat stage
Examples
Former USSR (Soviet Union)
China
Cuba
North Korea

15. Socialist Countries Today
Tend to be democracies
Major Industries owned by the people (Railways, Telephones, TV stations etc.)
Government taxes provide benefits to all citizens (healthcare, free higher education, pensions (retirement), Social security
Examples:
France, Canada, England

16. Review…
Radical Socialists (Communism) - All means of production and all profits are owned by the community together (Owen, Marx)
Laissez-Faire Capitalism - Government should keep its hands off business and allow owners to act in their own self interest to seek profit (Smith, Malthus and Ricardo)

17. The United State GOALS ECONOMIC GOALS: (About the Numbers!!!)
Efficiency
Growth (2%)
Price Stability (3%)
Full Employment (5-6%)
SOCIO-ECONOMIC GOALS: (About the People!!!)
Environmental Protection
Security
Equity
Justice TRADEOFFS???
Freedom

18. So what do we do? U.S. Roles Providing goods and services. Examples?
Safeguarding the market system. Competition!
Dealing with externalities. Positive & Negative
Helping people in need. Examples?
Helping specific groups. Examples?
Stabilizing the economy. Draw a graph!