Capitalism vs. SocialismCapitalism vs. Socialism

Definition of CapitalismDefinition of Capitalism

Capitalism is…Capitalism is… an economic system in which people make an economic system in which people make

the economic decisions in free markets the economic decisions in free markets (not controlled by the government)(not controlled by the government)

Productive resources are privately ownedProductive resources are privately owned

Definition of SocialismDefinition of Socialism

Socialism is…Socialism is…

A partial command system in which A partial command system in which the government influences many the government influences many economic decisions.economic decisions.

Basic productive resources are Basic productive resources are government owned; the rest are government owned; the rest are privately ownedprivately owned

Definition of CommunismDefinition of Communism

Communism is…Communism is… A command system in which the central A command system in which the central

government directs all major economic government directs all major economic decisions.decisions.

The government owns and completely The government owns and completely controls resourcescontrols resources

Supposedly the government will Supposedly the government will eventually not be needed to regulate eventually not be needed to regulate this after a while…this after a while…

Characteristics of CapitalismCharacteristics of Capitalism

Private Ownership-citizens may own Private Ownership-citizens may own property and businesses, etc.property and businesses, etc.

Individual Initiative-citizens are Individual Initiative-citizens are driven to begin business based on driven to begin business based on their “individual initiative”—they are their “individual initiative”—they are driven by the desire to be successful driven by the desire to be successful and get richand get rich

Competition-several sellers of a Competition-several sellers of a product or serviceproduct or service Rewards efficient businessesRewards efficient businesses Assures that consumer will get products Assures that consumer will get products

of good quality at low prices.of good quality at low prices. MonopoliesMonopolies

Freedom of Choice-consumers can Freedom of Choice-consumers can buy what they want from any buy what they want from any company they wantcompany they want

Profit or LossProfit or Loss Profit-the difference between the Profit-the difference between the

amound of money used to operate a amound of money used to operate a business and the amount of money the business and the amount of money the business takes in.business takes in.

Profit motivates people to start Profit motivates people to start businesses and improve productsbusinesses and improve products

People like money…People like money…

Pros and Cons of CapitalismPros and Cons of Capitalism

ProsPros Competition to Competition to

provide goods and provide goods and services keeps prices services keeps prices lowlow

Rewards hard workRewards hard work Provides choiceProvides choice Allows for the building Allows for the building

up of wealth and up of wealth and possessionspossessions

Consumers regulate Consumers regulate the marketthe market

ConsCons Exploits people who Exploits people who

cannot competecannot compete Uneven distribution of Uneven distribution of

wealthwealth Creates a money-Creates a money-

oriented societyoriented society Constant economic Constant economic

growth may deplete growth may deplete the earththe earth’’s resourcess resources

Mixed EconomyMixed Economy

Mixed economy is:Mixed economy is: Modified CapitalismModified Capitalism The government assumes The government assumes

responsibility for certain areas of the responsibility for certain areas of the economy such aseconomy such as Housing, transportation, health, Housing, transportation, health,

education, and welfare.education, and welfare.

Government subsidized programsGovernment subsidized programs

Postal servicePostal service Rail linesRail lines LibrariesLibraries Health careHealth care Social programsSocial programs RoadsRoads Infrastructure (bridges, freeways, etc.)Infrastructure (bridges, freeways, etc.) Can you think of any others?Can you think of any others?

Which is best: Capitalist Which is best: Capitalist economy, Socialist economy, economy, Socialist economy,

communism or a Mixed communism or a Mixed economy?economy?