Economic Theories

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Economic Theories

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Are You Aware?

• Kuwait has a very small population, while also
  having some of the worlds greatest oil wealth?
• The Kuwaiti economy allows free health care,
  education (through Ph.D.), and other amazing
  benefits to its citizens.
• America, on the other hand, has more people. So
  we provide an equal opportunity to fight over the
  money.

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I. The Role of Economic Systems (p. 26)

• Governments provide for many different kinds of
  economic systems.
• Economic systems make decisions about what goods
  and services should be produced, how they should
  be produced, and who gets them.
• Is government involvement necessary for economic
  systems to function? Why?

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II. Capitalism (p.26-28)

• Capitalism is based on free enterprise, or
  individual economic choices.
• Capitalism developed gradually from the economic
  and political changes in medieval and early
  modern Europe.
• The United States has a capitalist economy, but
  government plays a role.
• Governments role in the US economy has increased
  since the early 1900s.
• Today the US has a mixed market economy,
  incorporating both free enterprise government
  regulation of business and industry.

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III. Socialism (p.28)

• Under socialism, government owns the basic means
  of production, plans the use of resources,
  distributes many products and wages, and provides
  basic social services.
• Socialism developed in Europe during the
  nineteenth century.
• Some socialists favored taking over government by
  means of revolution, while other socialists
  believed in democratic socialism, in which
  economic conditions change peacefully and people
  have freedom and rights.

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• Socialist governments have taken power in several
  countries however, critics argue that this
  economic system fails to solve most economic
  problems.

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IV. Communism (p.29-30)

• Communism is based on the nineteenth-century
  ideas of Karl Marx, who argued that capitalism
  exploited workers to benefit a small group of
  capitalists who controlled the economy.
• Marx predicted that workers would eventually rise
  in a violent revolution, which would result in
  government ownership of all means of production
  and distribution when all property was held in
  common, there would be no need for government.

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• In communist nations, government makes all
  economic decisions owns the land, natural
  resources, industry, banks, and transportation
  systems and controls all mass communication.
  (5-year plans)
• Compare Contrast Capitalism, Socialism,
  Communism.
• Who benefits?
• Who suffers?
• Pros
• Cons