1. CAPITALISM!
“No other economic system in the history
of the world has been as successful”
-Civics Textbook copyright 2008
2. What is Capitalism?
An economic system
in which private
citizens own and use
the factors of
production in order
to seek a profit.
Based on free markets
and private
ownership
3. Not to be confused with
“FREE ENTERPRISE”
This is simply another
adjective used to
describe the
American Economy.
Competition is allowed
to flourish with a
MINIMUM OF
GOVERNMENT
INTERFERENCE
4. We operate under
both headings; our
economic system is
known as:
FREE MARKET
CAPITALISM
5. What makes Capitalism Work?
• Markets
• Economic Freedom
• Private Property Rights
• Competition
• Profit Motive
• Voluntary Exchange
6. • Local, regional, national or
global
• They connect different
sectors of the economy
MARKETS
• Chart of 522 – the one from
the essay….
– The Business Sector and
Consumer Sector are
connected through Factor
Markets and Product
Markets…
• Consumer Sovereignty
– The consumers decide what
the businesses are producing
7. Economic Freedom
FACTOR MARKET - We get to choose what type
of job to have…, and we can choose when and
where we would like to work.
PRODUCT MARKET - Consumers have the Right
to choose the products we buy. Businesses
have the right to produce whatever they want
Comes with Consequences……
8. Private Property Rights
FACT: We can keep whatever we earn
FACT: We have the right to own our own
property (“stuff”)
FACT: People take care of things better when
they OWN them…
RESULT: People work hard so they can get more
“stuff” to own.
9. Competition
• The struggle between
buyers and sellers to get
the best products at the
lowest prices
• Competition btw sellers
drives prices down
• Buyers compete to find
the best “deals”
10. Competition
• Competition rewards the most efficient
producers
• Competition punishes the least efficient
producers
• The result of competition in Capitalism is:
– Efficient production, high quality products, more
satisfied customers
11. Profit Motive
• People are free to risk their savings or any
part of their wealth in a business venture
• Could go either way….
• Profit Motive is the driving force that
encourages individuals to improve their
material well being…
– They are trying to “make a profit”
12. Voluntary Exchange
• The act of buyers and sellers freely and
willingly engaging in market transactions
• Both parties feel like they are getting a good
deal…engaging in a beneficial exchange….a
win-win situation…
14. Socialism
A formal economic system in which
society exerts considerable control over
the nation’s wealth and property in the
pursuit of social justice (a.k.a Command
Economy)
15. Socialism
“I am convinced that the path to a
new, better and possible world is
not capitalism, the path is
socialism.”
- Hugo Chavez
President of Venezuela from 1999 until his death in 2013
16. The Downfall of Capitalism
In the early 1800’s the workers in capitalist economic
systems were being exploited: doing all the work for
little pay, while the Capitalist made all the money. It
split our society into two distinct classes:
Bourgeoisie: The upper class – the owners of the
means of production
Proletariat: the poor, the working class
17. The Downfall of Capitalism
Opponents of Capitalism advocated
for the elimination of the system that
exploited the workers and replace it
with Socialism: The belief that the
means of production should be owned
or controlled by society. Thus, the
wealth would be more equally
distributed among the people.
18. The
Downfall of
Karl Marx was the Capitalism
outspoken German
economist, thinker,
writer, who detailed
this class struggle.
19. Marxist Beliefs:
The
1.) Economic Factors are the
Fundamental forces that Downfall of
drive societal behavior
Capitalism
2.) Capitalism breeds and
endless cycle of prosperity
and depression, the rich get
richer, the poor get poorer,
and “an army of the
unemployed would multiply”
3.) The dominant Bourgeoisie
would be challenged by the
more numerous Proletariat
(Revolution)
20. The
“The fall of the
bourgeoisie and the
Downfall of
rise of the Capitalism
Proletariat is
inevitable.”
He predicted a violent
Revolution is the
result of Capitalism
The solution to this is
Socialism
21. 6 Aspects of Socialism
Fairness
Collective Ownership
Wealth Distribution
Transform Human Nature
Utopian Society
Democratic in nature
22. Fairness
All men are created equal?
“from each according to his ability,
to each according to his needs”
- Socialism builds society “from” one’s “ability”
- Socialism gives “to” each one’s “needs”
(Capitalism only achieves the first – Socialism achieves both)
23. Collective Ownership
In place of Private ownership, the
means of production should be held
in common by society
Takes on two forms
Communal Ownership
State Ownership
24. Wealth Distribution
“The wealth of society should be
distributed equally”
Not totally “equally” but:
the spread of wealth within a capitalist world goes from
the CEO of a company to a homeless person.
In a socialist world, there is no CEO, and no homeless
person. Each person gets rewarded based on ability. Some
more some less, but more equal than Capitalism.
30. Perfect Society
Everyone’s needs can be met, and everyone’s
potential fulfilled without the restrictions of
freedom.
No crime
No poverty
Education and Healthcare for all
Elimination of violence and substance abuse
31. Democratic in Nature
Who is making Decisions? The Capitalist? Or
Society?
Is it money? Lobbyists? Greedy politicians
wanting more?
Or is it the people? Making decisions based on
the good of the whole, not the good of the
individual.
33. Communism – is a government
system. The government
controls EVERY aspect of your
life (News, Economy, Laws, etc.)
Socialism – an economic system
(as described by this
presentation) it is most often
used by communist governments
34. Communism – one class would
evolve, all property would be
held in common and there
would be no need for
government
35. Socialism Communism
capitalism:
Let’s compare the 3
using the example of
a car manufacturer
36. Car Manufacturing:
pretend you are the owner
Communism Socialism Capitalism
Your factory will You will be allowed You decide What to
be confiscated by to keep your Produce, How to
the dictatorship factory on the Produce it and for
and the production conditions that you Whom to Produce.
will be managed by do not earn an You are allowed to
a centralized excessive profit and compete for profit
bureaucracy. The that you provide with a minimum of
government decides well paying and government
what to produce spiritually interference.
and how much to fulfilling jobs to People can work
charge your employees and for you if they want
allowing them to to and they can buy
vote in all of your your car if they
decisions. want to. But they
have the freedom to
choose
37. Socialism: the factory owner
Imagine that you decide to manufacture a new
type of car. To do so, you will have to:
1.) get the approval of your employees.
2.)You will also have to get permission from the “societal
stakeholders” such as the people who live in the same city
as the factory who feel that your decisions might effect
them (air pollution, decrease quality of life).
3.)You will also have to incorporate “helpful suggestions”
from the government, who exist to promote the social good
38. CAPITALISM!
Imagine that you decide to manufacture a new type of car. To
do so, you will have to:
Make an efficient product at a low cost. Low cost meaning
low pay for employees.
39. COMMUNISM
The government decides what car to
produce, and how to produce it. They
only produce 1-2 options. If you need a
car, you are going to buy it from the
government. You need to buy it, or else
they wouldn't be producing it. When
you are done making the cars, the
government will tell you when and what
to produce next.
40. Socialism: Selling the Cars
If no one buys the car, you will absorb some losses, but
will avoid falling into poverty.
If people do buy it, you increased the social good of
the community and will reap some, but not excessive,
of the financial rewards.
Your true satisfaction comes from providing this
service to the community.
41. CAPITALISM!
Selling the Cars
People buy it? You get richer, your employees’ wealth stays
the same.
People Don’t buy it? You go Broke, and you have to fire all of
your employees – society suffers at your hands.
Someone (maybe even you) Learns from this and moves society forward
42. COMMUNISM:
selling the cars
Everyone buys it (because it is the only
car to buy), and the government then
takes profit and distributes the wealth to
the people.
