Ch. 16
Comparing Economic Systems
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CAPITALISM -
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Manorialism –
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Middle Ages - land owning nobles grant peasants
the opportunity to work the land in exchange for
fixed payments
Mercantilism 1500 to 1800 Europe measured a nation's power in
terms of its supply of gold and silver
Adam Smith – opposed mercantilism, proposed
capitalism. Profit motive/self-interest
Ch. 16, Sec. 2 - Capitalism Today
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Japan
Gov't controls access to foreign goods through
tariffs and provides incentives to producers
France
Indicative planning – gov't recommends economic
growth targets
1980's – nationalization – gov't purchases private
firms
1990's – privatization – restored private ownership
Capitalism Today
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South Korea -
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Gov't planners work with private business owners
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1970's - Incentives provided to auto, shipping, steel
producers
Today, S. Korea is a global force in these industries
Ch. 16, Sec. 3 -Socialism
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Market (democratic)socialism Gov't., private business and individuals share
planning and ownership
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Free elections of gov't officials
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Protect workers - unions
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Distribute wealth equally among all citizens
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Sweden -
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Gov't owns 10% of industry (mining, telecom and
railroads
Socialism (cont)
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80 % of Swedish workers belong to unions (15% in
US, 25% in Japan)
Economic planning is shared by the gov't, unions,
and private business
High taxation to redistribute wealth
Pays for health care, unemployment, retirement, free
education through college, subsidized housing and
child care
Ch. 16, Sec. 4 - Communism
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Karl Marx
Father of communism - “Communist Manifesto”
(1848)
Class conflict – Bourgeoisie (owners) vs. Proletariat
(workers)
Revolution, eliminate owners by transferring
property to state (gov't) control
Classless society – all share equally
Communism (cont)
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Russia (Soviet Union)
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1917 Revolution – Lenin gains control
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War communism – abolished private property,
nationalized land, forced labor
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1921 – New Economic Policy
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Peasants allowed to sell surplus crops for profit
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Small, private businesses allowed
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1924 – Stalin gains control
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Central planning – 5 year plans
Communism (cont)
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Production problems – industrial and military goods,
very few consumer goods
Quota system for agricultural goods produced
shortages
1980's - Reforms under Gorbachev
Perestroika (restructuring) move toward market
socialism
Soviet Union countries declare independence
Communism (cont)
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China -
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1949 – Communist revolution – Mao Zedong
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1953 – First 5 year plan – industrial development
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Second 5 year plan - “Great Leap Forward”
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More rapid industrial and agricultural development
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Collective farms (communes)
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Steel and heavy industry
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FAILURE (20-30M died in famines)
Communism (cont)
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1966 – Cultural Revolution
Restore communism- millions forced to rural areas,
factories and schools closed
1976 – Mao dies, new leader establishes “Four
Modernizations” targets industry, agriculture,
science and defense
State planning combined with incentives
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Peasants allowed to sell surplus crops
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Balanced production of capital and consumer goods
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Created “free trade” zones around port cities