Capitalism,
Communism, and
Socialism
1
Essential Question:
What are the differences
between capitalism,
communism, and socialism?
2
The Industrial World…
3
Laissez-faire
• “Let do” or “Leave it alone,” “Let people do as
they please”
• Owners of industry and business set working
conditions without interference of governments
4
Free Economies/Markets
• Adam Smith
• 1776: The Wealth
of Nations
• No government
interference
• 3 Natural Laws of
Economics:
1. Self-Interest
2. Competition
3. Supply and
Demand
5
Capitalism
• “An economic system based on private
ownership and on the investment of
money in business ventures in order to
make a profit.”
6
Capitalist Thinkers
• Thomas Robert
Malthus
• 1798: An Essay on the
Principle of Population
• Population will outgrow
food supply = poverty
• David Ricardo
• 1817: Principles of
Political Economy and
Taxation
• Growing population
causes low wages
7
Problems with Capitalism
• Uneven distribution
of wealth
• Wealthy factory
owners
• Poor working
conditions
• Pollution
• “Survival of the
fittest”
8
Karl Marx
• German journalist
• Radical writings expels
him from Germany,
France, and Belgium
• 1849: Left
Continental Europe
for England
• Remained poor on
principle (support
and reform for
working class)
9
Friedrich Engels
• German Philosopher
• Father was a textile
factory owner
• Worked as a business
apprentice by day;
revolutionary interests
• Helped work with (and
finance) Karl Marx
10
Communism
• Karl Marx and Friedrich Engels:
• The Communist Manifesto (1848)
• Bourgeoisie vs. Proletariat
(“haves” vs. “have nots”)
• Revolution
• Worker uprising overthrows
the capitalist system
• Classless society
11
Communism
• An economic system in which all means of production–
land, mines, factories, railroads, and businesses– are
owned by the people, private property does not exist,
and all goods and services are shared equally.
12
Communism Globally
• 1900’s: Marxist
revolutions
• Russia: Vladimir Lenin
• China: Mao Zedong
• Cuba: Fidel Castro
• Communism Today:
• North Korea
• Cuba
13
Problems with Communism
• Motivation to work?
• What incentives might there be?
• Classless societies don’t occur
• Corruption
• In the end, it fails…
14
How can the ill effects of the
Industrial Revolution be changed?
• Charles Fourier and Henri de Saint-Simon
• Optimism
• Progress
• Social Justice
15
Socialism
• An economic system in which the factors of production
are owned by the public and operate for the welfare of
all.
• Government plans the economy
• End of poverty and promotion of equality
• Socialism Today:
• Sweden
• Bernie Sanders
16
Problems with Socialism
Pros
• Government
programs for all
• Healthcare for every
citizen
Cons
• High taxes for
government
programs
• What about the
wealthy who could
afford other
healthcare?
17
Capitalism
• Individuals own
property and means of
production
• Progress comes from
individuals
• Businesses compete for
profits. (Better and less
expensive products)
• Consumer compete to
buy at lowest prices
• Government
doesn’t/shouldn’t
interfere in
economy
Socialism
• Community and state own
property and means of
production
• Progress comes from
cooperation of community
of producers
• Community and state
should protect workers
• Distribution of
goods according
to individual
need
18
19
What are the differences
between capitalism,
communism and socialism?
20