Alternative Economic
Systems
Communism: Theory
• Karl Marx believed history was a struggle
between capitalists (owned means of
production) and others (who worked for
capitalists).
Communism: Theory
• Karl Marx believed history was a struggle
between capitalists (owned means of
production) and others (who worked for
capitalists).
• During the Industrial Revolution, the means of
production became too expensive for most
people to own
Communism: Theory
• During the Industrial Revolution, the means of
production became too expensive for most
people to own
• This allowed capitalists to make large profits
Communism: Theory
• During the Industrial Revolution, the means of
production became too expensive for most
people to own
• This allowed capitalists to make large profits
• Exploited the workers, workers couldn’t afford
products which led to overproduction and
eventually recessions
Communism: Theory
• Exploited the workers, workers couldn’t afford
products which led to overproduction and
eventually recessions
• At some point, workers would tire of
conditions and revolt
Communism: Theory
• Exploited the workers, workers couldn’t afford
products which led to overproduction and
eventually recessions
• At some point, workers would tire of
conditions and revolt
• After the revolution, they would share the
fruits of their labor equally
Communism: Reality
• Marx never laid out plans for how a
communist economic system would function
Communism: Reality
• Marx never laid out plans for how a
communist economic system would function
• Thus, there have been numerous failed
attempts at communism (Soviet Union)
Communism: Reality
• Soviet Communism was driven by fear of the
government
Communism: Reality
• Soviet Communism was driven by fear of the
government
• The gov’t made all decisions, which led to
shortages of needed products, and surpluses of
unwanted products
Communism: Reality
• Soviet Communism was driven by fear of the
government
• The gov’t made all decisions, which led to
shortages of needed products, and surpluses of
unwanted products
• The standard of living was very low, and
people lacked incentive to work hard
Communism: Reality
• The gov’t made all decisions, which led to
shortages of needed products, and surpluses of
unwanted products
• The standard of living was very low, and
people lacked incentive to work hard
• This led to its failure when the basic
commodities needed for survival were not
being adequately produced
Socialism: Reality
• Socialism traces its roots to Marx, but without
the worker’s revolution
Socialism: Reality
• Socialism traces its roots to Marx, but without
the worker’s revolution
• Socialism can exist on very different levels
Socialism: Reality
• Socialism traces its roots to Marx, but without
the worker’s revolution
• Socialism can exist on very different levels
– In Western Europe, the government may own large
industries and utilities while allowing other
markets to be capitalistic
Socialism: Reality
• Socialism traces its roots to Marx, but without
the worker’s revolution
• Socialism can exist on very different levels
– In Western Europe, the government may own large
industries and utilities while allowing other
markets to be capitalistic
• The current trends in in Western Europe are
away from Socialism
Socialism: Reality
• Socialism can exist on very different levels
– In Western Europe, the government may own large
industries and utilities while allowing other
markets to be capitalistic
• The current trends in in Western Europe are
away from Socialism
– Many nations have sold off government owned
industry to private business b/c they are more
efficient
Capitalism: Reality
• Private individuals make the decisions of the
economy with limited gov’t input
Capitalism: Reality
• Private individuals make the decisions of the
economy with limited gov’t input
• The government’s role is to set and enforce
basic rules for how businesses are organized
Capitalism: Reality
• Private individuals make the decisions of the
economy with limited gov’t input
• The government’s role is to set and enforce
basic rules for how businesses are organized
• We are far from pure capitalism in the US
Capitalism: Reality
• Private individuals make the decisions of the
economy with limited gov’t input
• The government’s role is to set and enforce
basic rules for how businesses are organized
• We are far from pure capitalism in the US
– Over 1/3 of the money earned in our country goes
to the gov’t to support education, welfare, health
services and various other gov’t programs
Capitalism: Reality
• We are far from pure capitalism in the US
– Over 1/3 of the money earned in our country goes
to the gov’t to support education, welfare, health
services and various other gov’t programs
• However, we are far from other comparative
countries like France and Sweeden who are
well over 50%