Smith v. MarxSmith v. Marxoror

Capitalism v. SocialismCapitalism v. Socialism

Modern Capitalism

• Emergence– Capital is needed to build factories, purchase

machines & raw materials & pay labor

– ____________ System because individuals invest in hopes of a profit (future return)

– Based on concepts of ___________& competition

– Needs & desires of __________ (purchasers) met by quality goods at lowest price

Adam Smith• 1776: Wrote Wealth

of Nations• ______________

– People work for self interest

– Society naturally benefits

• ______________– Government does not

interfere with business “hands off”

Basic Principles

• ______________: individual not gov’t

• ______________: anyone can participate in business

• ______________: do it for $$$$

• ______________: lower prices, better quality, bigger choice, stimulates creativity

• ______________: supply & demand

Labor Discontent

• _________________Barely above starvation level

• ___________________Hrs./day

• Women & children (from age 5 )

• Unsanitary & UNSAFE working conditions

• Technological Unemployment displaced workers

Socialism- a movement to displace Capitalism

• CAPITALISM• __________________

own & operate• __________________

provide people with goods & services

• __________________make decisions

• SOCIALISM• __________________

__________________• __________________

__________________• State planning Gov’t

plans economy

Karl Marx & Scientific Socialism

• __________________: 1818-1883 • “father of communism”

– lived in poverty & witnessed the suffering of English industrial workers

• Wrote:– _______________ : pamphlet written w/

Fredrich Engels– Used “communist” to distinguish himself from

Utopians– Das Kapital: criticism of capitalism

Flaws of Socialism

• Individuals lose incentive to work

• Gov’t becomes a dictatorship

• ______________________________________________________________________

• Gov’t central planning of economy

• Gov’t must be in constant state of emergency to instigate production

• Gov’t must adopt capitalist concepts

Flaws of Market led capitalism

• _____________________• _____________________• _____________________• _____________________• These are a few of the

reasons why governments became involved with regulating the economy