Adam Smith vs Karl Marx

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Adam Smith vs Karl Marx

• Whos the man with the economic plan?

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Adam Smith

• individuals own the means of production
  (factories, machines, land) and reinvest profits
  as capital to expand business
• Capital wealth that is invested in order to
  create more wealth

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Adam Smith- The Wealth of Nations

• Laissez-faire- (let do) non-interference of the
  government in business THE INVISIBLE HAND.
• HANDS
  OFF!

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The Invisible Hand and

• Minimum Wage
• Price Controls
• Environmental Protection
• Child Labor
• Discrimination
• There would be no laws! Hands off!

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Capitalism

• Free Market Economy One in which consumer
  choice, the law of supply and demand and
  competition drives companies decisions regarding
  what products to produce and the prices of those
  products.

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Adam Smith3 Laws

• Law of Competition

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Law of Self Interest
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Law of Supply and Demand
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Socialism (R. Owen)

• A theory or system of social organization that
  promotes
• that the community as a whole should own and
  control of the means of production (factories /
  land)
• profits from production should be divided amongst
  the community as a whole

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Socialism Continued

• Believe capitalist take advantage of workers
• Community or state (govt) must act to protect
  workers
• Unequal distribution of wealth is unfair (caused
  by capitalism)
• Goods should be divided according to each
  persons needs

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Karl Marx The Communist Manifesto

• Radical Socialism or Marxism
• Workers will seize control of the government and
  businesses

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Then what

• Redistribute profits equally
• (share the wealth equally)
• Own all property in common (no private property)

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Socialism ? Communism

• From each according to his ability, to each
  according to his need (all must work, all share
  in profits)
• Economic equality (no more classes)
• No government or police would be needed in a
  community of equals where all is shared
  government would fade away ? Communism

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Communist Countries Today

• Communism Dictatorship
• never moved passed Marxs Dictatorship of the
  Proletariat stage
• Examples
• Former USSR (Soviet Union)
• China
• Cuba
• North Korea

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Socialist Countries Today

• Tend to be democracies
• Major Industries owned by the people (Railways,
  Telephones, TV stations etc.)
• Government taxes provide benefits to all citizens
  (healthcare, free higher education, pensions
  (retirement), Social security
• Examples
• France, Canada, England

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Review

• Radical Socialists (Communism) - All means of
  production and all profits are owned by the
  community together (Owen, Marx)
• Laissez-Faire Capitalism - Government should keep
  its hands off business and allow owners to act in
  their own self interest to seek profit (Smith,
  Malthus and Ricardo)

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The United State GOALS

• ECONOMIC GOALS (About the Numbers!!!)
• Efficiency
• Growth (2)
• Price Stability (3)
• Full Employment (5-6)
• SOCIO-ECONOMIC GOALS (About the People!!!)
• Environmental Protection
• Security
• Equity
• Justice TRADEOFFS???
• Freedom

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So what do we do? U.S. Roles

• Providing goods and services. Examples?
• Safeguarding the market system. Competition!
• Dealing with externalities. Positive Negative
• Helping people in need. Examples?
• Helping specific groups. Examples?
• Stabalizing the economy. Draw a graph!