The Three Economic Isms
Capitalism
– An economic system where a country’s farms, factories, and businesses are totally owned
and controlled by individuals and private businesses. - The Wealth of Nations by Adams
Smith.
– It is also called Free market, Private enterprise and Free enterprise.
– It is based on competition, profits, and self-interest.
– An individual can start a business and make a profit.
– Capitalism began during the Industrial Revolution.
– Unbridled capitalism created problems: Unemployment, poverty, class conflict, economic
depressions.
-Analyze– You have two cows.
– You sell one and buy a bull.
– Your herd multiplies.
– You can do whatever you want with your cows because they're private property.
Communism
– It is also called Command or Planned
– An economic system where a country’s farms, factories, and businesses are totally owned
and controlled by the government. - The Communist Manifesto by Karl Marx.
– It is based on five principles:
1. Private property was the root of all evil: Profit was the motive for one man to exploit
another.
2. The working class would overthrow the capitalist system.
3. Political Freedom: As the ruling class, workers would have political freedom.
4. Economic Security: As the ruling class, workers would not suffer poverty or
unemployment.
5. “From each according to his ability, to each according to his needs.”
– This was the theory. In practice, a small group (the Communist Party) ran a dictatorship
-Analyze– You have two cows.
– The government takes them both and provides you with some milk.
Socialism
– An economic system that is a mix:
1. Basic industries are owned and controlled by government. (This is public ownership.)
2. Other industries are owned and controlled by individuals and private businesses.
3. According to Socialism, workers were supposed to stick with workers
4. Government takes care of the poor, unemployed, disabled, the elderly, widows and
orphans.
– All the Socialist parties all fell apart during World War I (1914-1918).
-Analyze– You have two cows.
– The government takes all the milk you produce.
– Then gives you back as much as you can prove you need, which could possibly be more
than you produced.
– The proof requires paperwork and government bureaucrats to read it.
Directions: Analyze each statement and decide if it is Capitalism, Communism or Socialism.
1. Government owns some industries.
2. Government owns all industries.
3. Individuals own all industries.
4. One guy owns a car factory
5. This economic system is based on freedom of the individual.
6. The Labor Party started this political movement.
7. Karl Marx was the founder of this philosophy.
8. The Government runs some basic industries.
9. Adam Smith wrote a book, Wealth of Nations, about this economic system.
10. They wanted the government to help
11. They wanted to be the ruling class.
12. They wanted to spread the wealth evenly.
13. They wanted to end wealth - by abolishing private property.
14. This economic system arose at the beginning of the Industrial Revolution.
15. This economic system was dominant in the 19th century.
16. Individuals own no property
17. This economic system America uses today.
18. This economic system has been discredited.
19. This economic system hates profits and private property.
20. This economic system is free enterprise.
21. This economic system is based on competition, profits, and self-interest.
22. This economic system caused unemployment, poverty, class conflict, and
economic depressions.
23. “From each according to his ability, to each according to his needs.”
24. Imagine if your school was run by Capitalism or Communism, what would be different? Choose
either one and describe your school. Be Specific:
A. New name of the school
B. school rules and discipline
C. School authority
D. courses
E. extracurricular activities
F. field trips
G. cafeteria food
H. clothing