Lesson 18
How do the principles of scarcity and abundance contribute to economic systems? What are Capitalism, Communism, Socialism, and Mixed Economy Systems? What are some economic problems of countries today?
For this lesson I've put together a slideshow about Economics and how different systems work. You can open the slideshow below, but you will have to sign into your pioneercharterschool.org e-mail address to view the presentation:
Slide Show: ECONOMIC SYSTEMS
Once you have opened the slideshow press these keys on your keyboard CTRL and F5. (or you can just click on the dropdown of 'view' and then click 'present') There are some videos in the presentation, if you click on them they will play.
While you are watching this slideshow fill out this worksheet:
While you are watching this slideshow fill out this worksheet:
notes_for_economic_systems.odt | |
File Size: | 11 kb |
File Type: | odt |
So CAPITALISM is when people control the economic system. In the slideshow Capitalism is known as a Market Economy. There are no countries today that have a purely Capitalist Economic System because a pure Capitalist system has no government involvement whatsoever. Our government sets regulations like minimum wage, and it makes rules for the quality of food sold in stores. This may not seem like much government involvement, but they are involved.
A few more things you need to know about Capitalism- it has to have these 4 things:
1- Private Property
2- Competitive Markets
3- Rule of Law
4- Entrepreneurship & Innovation.
You're going to need to know what these things mean to complete the second part of the lesson.
Private Property is the right that each individual has to own property. This doesn't just mean land, but also material possessions. If you owned a business and had goods to sell at your store, they would be your private property until they were sold. If you remember from the slideshow, the idea of COMMUNISM has no private property.
Competitive Markets are markets that aren't controlled by the government. To be a truly Competitive Market it has to have Flexible Prices and Voluntary Exchange. Flexible Prices is where prices change according to Supply and Demand. Gas prices aren't the same all the time. When you go to the store to buy a gallon of milk, the price will not be the same every time. These are examples of flexible prices. Voluntary Exchange is where people can choose to participate in the market. If a market uses slave labor to produce goods, that is not voluntary. If a market uses thugs and gangs to intimidate and use violence to influence the market, that is not voluntary.
Rule of Law. Just because a country has laws, doesn't mean it has 'rule of law'. To have 'rule of law' the leaders have to be subject to the law as well as the citizens. So if a country is ruled by a president, the president and the citizens have to obey the laws to have RULE OF LAW.
Entrepreneurship and Innovation is the freedom of the people to create their own business. If they want to create something and sell it, the people have that right.
These four things constitute a Capitalist system. Remember countries all have components of these, but a true Capitalist system has no government involvement. The reason that the United States is not a Capitalist system is because the government sets rules. The government says that you can't hire children. The government says that you can't discriminate when you hire employees.
A few more things you need to know about Capitalism- it has to have these 4 things:
1- Private Property
2- Competitive Markets
3- Rule of Law
4- Entrepreneurship & Innovation.
You're going to need to know what these things mean to complete the second part of the lesson.
Private Property is the right that each individual has to own property. This doesn't just mean land, but also material possessions. If you owned a business and had goods to sell at your store, they would be your private property until they were sold. If you remember from the slideshow, the idea of COMMUNISM has no private property.
Competitive Markets are markets that aren't controlled by the government. To be a truly Competitive Market it has to have Flexible Prices and Voluntary Exchange. Flexible Prices is where prices change according to Supply and Demand. Gas prices aren't the same all the time. When you go to the store to buy a gallon of milk, the price will not be the same every time. These are examples of flexible prices. Voluntary Exchange is where people can choose to participate in the market. If a market uses slave labor to produce goods, that is not voluntary. If a market uses thugs and gangs to intimidate and use violence to influence the market, that is not voluntary.
Rule of Law. Just because a country has laws, doesn't mean it has 'rule of law'. To have 'rule of law' the leaders have to be subject to the law as well as the citizens. So if a country is ruled by a president, the president and the citizens have to obey the laws to have RULE OF LAW.
Entrepreneurship and Innovation is the freedom of the people to create their own business. If they want to create something and sell it, the people have that right.
These four things constitute a Capitalist system. Remember countries all have components of these, but a true Capitalist system has no government involvement. The reason that the United States is not a Capitalist system is because the government sets rules. The government says that you can't hire children. The government says that you can't discriminate when you hire employees.
The slideshow also talked briefly about SOCIALISM and COMMUNISM. These two systems are very different in theory than they are in practice. Karl Marx and Fredrich Engels came up with the 'Communist Manifesto'. They both believed that it was a better economic system. It turns out that in practice, Communism and Socialism haven't been a very positive thing.
HITLER and Nazi Germany
STALIN and Soviet Russia
MAO and Communist China
All of these are examples of Socialism and Communism in the past. All of these leaders have wreaked havoc on their respective countries. They are also notorious murderers. So although Karl Marx may have had an idea that wasn't awful, many of the leaders that have tried to implement Socialism and Communism in their countries haven't been benevolent leaders.
Because of this reputation, socialism and communism have been feared in America. Watch this cartoon from 1948:
HITLER and Nazi Germany
STALIN and Soviet Russia
MAO and Communist China
All of these are examples of Socialism and Communism in the past. All of these leaders have wreaked havoc on their respective countries. They are also notorious murderers. So although Karl Marx may have had an idea that wasn't awful, many of the leaders that have tried to implement Socialism and Communism in their countries haven't been benevolent leaders.
Because of this reputation, socialism and communism have been feared in America. Watch this cartoon from 1948:
The cartoon you just watched is a great example of the attitude Americans had in the 40's 50's and 60's. To those Americans, Communism took away freedom. And they did have a point, looking at the corrupt systems that were in practice- it was easy to see that they were ineffective systems.
So far I have been using the terms Socialism and Communism interchangeably. If you remember from the slideshow you watched at the beginning of the lesson, Socialism is what Karl Marx said led to Communism.
Karl Marx believed that a economy would start with Capitalism, and then they would get frustrated with the system. Remember in a pure MARKET ECONOMY (Capitalism) there is no government control. So the government wouldn't be able to set a minimum wage, or make laws about employing children, or regulate what kind of food you can sell.
Marx said everyone would turn to the government to help control the economy. That is SOCIALISM. Eventually the government would become corrupt from all the power and the people would turn to Communism. In a perfect system, there wouldn't have to be as much government control with Communism because the people would all agree that wealth should be shared equally.
This was what Karl Marx thought would be the natural process of things. He thought that people would get tired of inequality and lower-class and the upper-class separation. But, no country has followed this 'natural' progression. In Russia there was a Communist party that wanted these changes, but many of the other citizens did not. The leaders (first Lenin and then Stalin) tried to enforce Communistic systems. Stalin murdered his political enemies and let millions of citizens starve to death.
Hitler hated 'Communism' but his country had 'Fascism' which is a form of Socialism. Hitler hated Communism because it had become associated with the Jewish people, and he hated the Jews. Hitler did promote government control, but he believed that German citizens were superior and had the right to rule everyone else. He killed those who he found 'inferior'.
In China, Mao also tried to enforce Communism. He helped industrialize his country, but he also murdered tens of millions of his citizens.
There's an ancient Roman saying "Quis custodiet ipsos custodes?" which translates to 'who shall watch the watchers? Who watched Hitler ? Who watched Stalin ? When a person in government has too much power it is dangerous because they don't have to answer to anyone. No one tells them what to do. That's why our system of checks and balances is so important! The President should be watched/checked by other members of the government... and the people!
So with all the disastrous examples of Communism and Socialism in the past, it is easy to see why America is so anti-Communist.
So far I have been using the terms Socialism and Communism interchangeably. If you remember from the slideshow you watched at the beginning of the lesson, Socialism is what Karl Marx said led to Communism.
Karl Marx believed that a economy would start with Capitalism, and then they would get frustrated with the system. Remember in a pure MARKET ECONOMY (Capitalism) there is no government control. So the government wouldn't be able to set a minimum wage, or make laws about employing children, or regulate what kind of food you can sell.
Marx said everyone would turn to the government to help control the economy. That is SOCIALISM. Eventually the government would become corrupt from all the power and the people would turn to Communism. In a perfect system, there wouldn't have to be as much government control with Communism because the people would all agree that wealth should be shared equally.
This was what Karl Marx thought would be the natural process of things. He thought that people would get tired of inequality and lower-class and the upper-class separation. But, no country has followed this 'natural' progression. In Russia there was a Communist party that wanted these changes, but many of the other citizens did not. The leaders (first Lenin and then Stalin) tried to enforce Communistic systems. Stalin murdered his political enemies and let millions of citizens starve to death.
Hitler hated 'Communism' but his country had 'Fascism' which is a form of Socialism. Hitler hated Communism because it had become associated with the Jewish people, and he hated the Jews. Hitler did promote government control, but he believed that German citizens were superior and had the right to rule everyone else. He killed those who he found 'inferior'.
In China, Mao also tried to enforce Communism. He helped industrialize his country, but he also murdered tens of millions of his citizens.
There's an ancient Roman saying "Quis custodiet ipsos custodes?" which translates to 'who shall watch the watchers? Who watched Hitler ? Who watched Stalin ? When a person in government has too much power it is dangerous because they don't have to answer to anyone. No one tells them what to do. That's why our system of checks and balances is so important! The President should be watched/checked by other members of the government... and the people!
So with all the disastrous examples of Communism and Socialism in the past, it is easy to see why America is so anti-Communist.
Assignment 18
At the bottom of the page you took notes on: 'Notes for Economic Systems' I want you to write a couple paragraphs. I've talked a little bit about Communism and Capitalism. Both are based on different ideas. Capitalism is the idea that you are in charge of your own destiny and that you need to work to make yourself great. Communism is the idea that the individual doesn't matter, the society matters. You should work to make the society better.
I want you to write a couple paragraphs that answer the question:
"What style of play is best for an athletic team, to play like Capitalists or Communists?"
Is it better for a player on a team (like Basketball) to play for himself and score as many points as he can, or to play so his team can succeed. There's no right or wrong answer, I want to know your opinion.
Look at it from different points of view- what would the coach say? What would the fans say?
Listen to this 5 minute podcast:
I want you to write a couple paragraphs that answer the question:
"What style of play is best for an athletic team, to play like Capitalists or Communists?"
Is it better for a player on a team (like Basketball) to play for himself and score as many points as he can, or to play so his team can succeed. There's no right or wrong answer, I want to know your opinion.
Look at it from different points of view- what would the coach say? What would the fans say?
Listen to this 5 minute podcast:
Steve Nash Podcast
When you're done typing your 2 paragraphs (again, just write them at the bottom of your 'Notes for Economic Systems' document) submit the assignment below.
Standard 5: Objective 1 A, B, & C