1. Comparative Economic Systems Mercantilism, Capitalism, Mixed- Economies, Socialism and Communism

2. Mercantilism The chief characteristics of Mercantilism include: 1.Empire, A “Mother Country” & attending colonies 2.Emphasis on gold and silver bullion. 3.A positive balance of trade 4.The Zero-Sum Game 5.Command economic structure

3. Laissez-Faire Capitalism Market forces such as Supply & Demand drive the activity Government has a “hands off” policy in economic affairs Classical Economics is the domain of early laissez-faire theory

4. Adam Smith and The Wealth of Nations Smith, a Scot, was the principal architect of modern market economics. The metaphor he used to describe market forces was the “invisible hand.” He published his great work, The Wealth of Nations, in 1776.

5. The Principles of Capitalism include: The idea that “capital”, a factor of production that is not wanted for itself but for its ability to help in producing other goods, is a worthy means of generating wealth. A belief in “Private Property”; Emphasis on individual initiative, entrepreneurship, innovation, and competition; A belief in Profit.

6. Say’s Law: “Supply constitutes demand.” In the quest for a balanced equation of market equilibrium between supply and demand, Say favored the “supply” side of the equation.

7. “Supply Constitutes Demand” Although Robinson was quite hungry, having eaten nothing for days, and his demand for food being intense, there would be no dinner until he created a supply by catching a fish to eat. Say’s Law can be explained by applying “The Crusoe Effect”, a metaphor based on the main character of Daniel Defoe’s novel about a man shipwrecked on an uninhabited island.

8. John Maynard Keynes This 20 th Century English economist is the guru of “Demand” side economics. His work, The General Theory of Employment, Interest, and Money, published in 1936, is the source of demand theory referred to as Keynesian Economics. The book challenged the established Classical Economics

9. The Great Depression and the New Deal FDR’s New Deal employed Keynesian principles in numerous government sponsored programs designed to use tax dollars as a means of “priming the pump.” The creation of jobs in public projects would provide pay in the form of wages and salary to stimulate DEMAND. This, in turn, was to reverse the spiraling trend to deflation: Lower wages, lower prices, fewer jobs.

10. Other Key Classical Economists Thomas Malthus proposed that while food production increased arithmetically; population grew exponentially. David Ricardo: The Iron Law of Wages The Law of Comparative Advantage David Ricardo Thomas Malthus

11. Some of the abuses of laissez-faire capitalism such as: Child labor Dangerous conditions Unfair labor practices Extremely long hours Resulted in calls for reform and regulation.

12. In cases where Profits became the sole determinant of economic decision making, the darker side of the industrial revolution, became so apparent as to give rise to an alternative ideology, Socialism. In London, a school for boys who suffered industrial injuries resulting in amputation. Many were textile mill scavengers, tasked with retrieving scraps of fabric from between various machinery.

13. Socialism Socialism is an economic system characterized by social ownership of the means of production and co-operative management of the economy. There are many variants of socialism, but because it requires collective ownership of property, the most dominant form is State Sponsored Socialism.

14. Early “Utopian” socialists appeared in France in the years following the French Revolution. While they enjoyed some support for proposed economic reforms, radical ideas about religion, marriage, family, and sexuality, limited any wide acceptance. Henri de Saint-Simon Pierre Joseph Proudhon The First Anarchist “Property is theft.” “Cooperation Will replace Competition.”

15. Utopian Socialists, Positivism, and the Fabians Throughout the 19 th Century European socialists tried out numerous experiments in social order and governance in the pursuit of a New Eden, a reformed social state that was a “Utopia”. They believed that this could be achieved by evolutionary change through existing institutions Auguste Comte George Bernard Shaw Charles Fourier Robert Owen Eduard Bernstein Edward Bellamy William Morris Etienne Cabet John Humphrey Noyes Sidney & Beatrice Webb

16. Communism Communism is the most extreme expression of Socialism. It requires a violent Revolution. The Communist Manifesto and Das Kapital, lay out the principles Marx and Engels believe justify their call to revolution Friedrich Engels Karl Marx

17. Principles of Communism Labour Theory of Value: the value of a good is derived from how much labor went into its production. Alienation of Labor: Workers are separated from the fruits of their labor and alienated from the Bourgeoisie by exploitation. Class Struggle: In Marxist view of History, one class always exploits the others.

18. Principles of Communism (cont.) Historical Materialism: The endless conflict over who will control resources and the means of production. This is also referred to as “Dialectical Materialism.” The oppression of the workers under Capitalism would result in inevitable revolution. Dictatorship of the Proletariat: The transitional rule preceding a classless society, when “the state will wither away.”

19. Ten Policy Planks of the Communist Manifesto 1.Abolition of private property in land and application of all rents of land to public purpose. 2, A heavy progressive or graduated income tax. 3.Abolition of all rights of inheritance. 4.Confiscation of the property of all emigrants and rebels. 5.Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly. 6.Centralization of the means of communication and transportation in the hands of the state. 7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan. 8. Equal obligation of all to work. Establishment of Industrial armies, especially for agriculture. 9.Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country by a more equable distribution of the population over the country. 10.Free education for all children in government schools. Abolition of children's factory labor in its present form.