SECTION 3
Goals of Free Enterprise
Economic Systems and the American System
ECONOMIC PERSPECTIVES - CHAPTER 2
SECTIONS 3 AND 4
SECTION 3
Goals of Free Enterprise (cont.)
Economic g
goals of Americans:
– Freedom—to allow each member of
society to make choices
– Economic efficiency—wise use of
limited resources as to obtain the
greatest benefits possible
– Economic equity—economic system
should
h ld b
be ffair
i and
d jjustt (the
(th attempt
tt
t to
t
balance an economic policy so that
everyone benefits fairly)
SECTION 3
The economic goals of
free enterprise are
freedom efficiency
freedom,
efficiency,
equity, security,
stability, and growth.
SECTION
3f Free
G l of
Goals
F
Enterprise
E t
i (cont.)
– Economic security—want
y
protection against
p
g
risks beyond our control
– Economic stability—attempt to reduce extreme
ups and downs in the standard of living
– the material well-being of an individual, group,
or nation,
ti
measured
db
by h
how wellll th
their
i
necessities and luxuries are satisfied
– Economic growth
growth—increased
increased production of
goods and services over time
– expansion
p
of the economy
y to p
produce more
goods, jobs, and wealth
SECTION
Ri ht 3and
Rights
dR
Responsibilities
ibiliti (cont.)
Rights and Responsibilities
Individuals have both
rights and responsibilities
within a free-enterprise
system.
The American free-enterprise
p
system
y
bestows numerous economic rights and
protections on us, but we must take on
certain responsibilities (such as supporting
ourselves and our family).
We must also become knowledgeable about
government policies and elect responsible
government officials
officials.
CONCEPT TRANS 2
SECTION 4
Pure Socialism
Pure socialism
P
i li
is
i
characterized by centralized
economic
i planning
l
i and
d state
t t
ownership of the factors of
production.
d ti
SECTION 4
FIGURE 3
Pure Socialism (cont.)
Pure command socialism is an economic
system
t
in
i which
hi h th
there iis littl
little private
i t
property and the government owns the
factors of production and attempts to
manage output and the distribution of
g
goods.
View: Pure Socialism
SECTION
P
Pure
Socialism
S4 i li
(cont.)
Karl Marx viewed history
y as a continual
struggle between capitalists (owners of
land, machines, and factories) and the
proletariat (workers).
• term Karl Marx used to refer to workers
– He believed that the capitalists exploited
the proletariat.
View: The Change From Capitalism to
Socialism According to Marx
FIGURE 4
SECTION
P
Pure
Socialism
S4 i li
(cont.)
He outlined the eventual collapse
p of
capitalism and predicted the evolution of
socialism into communism, an idealized
society in which no government is
necessary (term used by Karl Marx)
SECTION
P
Pure
Socialism
S4 i li
(cont.)
In the twentieth century,
y, socialism split
p into
two major trends:
– Democratic
e oc at c soc
socialism
a s
– Authoritarian socialism
Today, communism means any authoritarian
socialist system
y
that supports
pp
revolution as
a means to overthrow capitalism and bring
about socialist goals.
VOCAB22
VOCAB23
democratic socialism: system
y
that
works within the constitutional
framework of a nation to elect
socialists to office; the government
usually controls only some areas of
the economy
Examples:
Norway, Sweden, Denmark, Finland, Iceland,
Venezuala
SECTION 4
authoritarian socialism: system
y
that
supports revolution as a means to
overthrow capitalism and bring about
socialist goals; the entire economy is
controlled by a central government;
also called communism
Examples:
China, North Korea, Cuba, Saudi Arabia,
SECTION
4 fit off C
Th B
The
Benefits
Capitalism
it li
(cont.)
The Benefits of Capitalism
p
The main benefits of
capitalism are economic
efficiency and individual
freedom.
Supporters
pp
of capitalism:
p
– Those who place a high value on
personal freedom
freedom, initiative
initiative, and
individuality.
– Demonstrate that capitalism allows for
more efficiency in the marketplace and
for greater rates of economic growth.
View: Planning in Market and
Command Economies
FIGURE 5
SECTION 4
The Benefits of Capitalism (cont.)
The United States has an economyy p
planned
by private firms, individuals, and elected
government officials, while socialism has
an economy planned by central planners.
Problems of capitalism:
– Income is unequally distributed
throughout the economy.
– There are not enough schools and
museums for the general public
public.
END OF CHAPTER 2