Economic Systems
Capitalism
Socialism
Communism
Definition
A
system for producing,
selling, and distributing
goods and services.
Capitalism (Free Market)

Economic system
in which private
individuals or
groups use private
capital (money)
and labor to
produce goods
and services.
Capitalism Features

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People control economic
production and output.
People decide what, where,
and how to produce what
consumers buy.
Owners decide how much to
pay workers and use profits.
Prices are determined by
supply and demand and
competition.
The role of government is to
support businesses with
minimal government
involvement.
Higher education and health
care is paid for by the
consumer.
Effects of Capitalism
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People can own land and
business.
Unequal distribution of
wealth
Low unemployment rate:
3%-5%.
Favors a democratic or free
government.
Creates the wealthiest
nations.
Creates economic classes:
poor, working poor, middle
class, and rich.
Examples

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USA
South Africa
Japan
Mexico
Socialism

An economic system in
which the government
owns most basic
industries, such as
transportation,
communication, and
banking: non basic
industries are privately
owned such as
restaurants, hair salons,
and factories.
Socialism Characteristics/Basic
Industries

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Basic industries are
essential for a nation to
function. Ex: transportation,
communication
Basic industries are ran for
the good of society, not for
profit.
The government decides
how much to pay for goods
and how much to pay
workers.
Profits made from basic
industry allow for nations to
pay for health care and
higher education.
Socialism Characteristics/Non Basic
Industries
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Non basic industries are
nice, but not necessary.
Ex: Internet Business
Non basic industries and
services follow a
capitalist model.
Non basic industries are
privately owned and
consumers decide what
products to buy.
Effects of Socialism
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Lessens gap between the
poor and rich
Gives citizens equal
availability to healthcare
and education.
Welfare and insurance for
unemployed are
distributed.
People live comfortable
lives, but have less than
those living in capitalistic
countries.
Examples of Socialist Countries
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Socialism is the ½
point between
communism and
capitalism.
Spain, Portugal,
Sweden, and Italy
Communism

Economic system
in which the
government owns
all property such as
farms and
factories, for the
benefit of the
citizens.
Communism Characteristics

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The government usually
controls all aspects of
citizens’ lives.
The government controls
the price of goods and
services how much is
produced, and how much
workers are paid.
People do not own
businesses or factories, all
means of production are
owned by the government.
Effects of Communism
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The governments of communist
countries are usually violent in
nature and do not support
freedom.
Communism is aimed to create a
classless society.
Unemployment and poverty are
common.
People are not able to make their
own economic decisions or to
earn their own fortune.
The USA fought the Cold War to
stop the spread of communism.
Examples of Communism
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Cuba
China
North Korea