CapitalisCapitalismm

Characteristics of Characteristics of CapitalismCapitalism

Land and capital Land and capital are privately are privately owned. (They are owned. (They are notnot owned by the owned by the government.)government.)

Buyers and sellers Buyers and sellers interact in markets. interact in markets.

Everyone is Everyone is freefree to to pursue their own pursue their own self-interests. self-interests.

The Individual PeopleThe Individual People

Answer the basic Answer the basic economic questionseconomic questions

Products are made and Products are made and prices are determined prices are determined based on based on SUPPLY AND SUPPLY AND DEMAND.DEMAND.

Laissez-FaireLaissez-Faire

““Hands off Hands off government”government”

The government The government should not be should not be involved involved regulating the regulating the economyeconomy

THEORY: THEORY:

Minimal Minimal government government involvement is involvement is required. required. CompetitionCompetition will will regulate the regulate the economy. economy.

Practice:Practice:

Government Government regulation does exist regulation does exist in most capitalist in most capitalist economies today.economies today.

US example: Bailout BillUS example: Bailout Bill

The Industrial The Industrial RevolutionRevolution

Adam SmithAdam Smith Scottish Scottish PhilosopherPhilosopher

Wrote Wrote Wealth Wealth of Nationsof Nations

Examined how a Examined how a market system workedmarket system worked

How How producersproducers decide what to makedecide what to make

How How consumersconsumers decide what to decide what to purchasepurchase

Thought that a Thought that a combination of combination of self-interest, self-interest, private property, private property, and competition and competition was best for was best for society.society.

Karl MarxKarl MarxGerman German PhilosopherPhilosopher

Promoted Promoted “scientific “scientific socialism”socialism”

Marx and others….Marx and others….

Thought that capitalism was divided Thought that capitalism was divided between the “haves” and the “have-between the “haves” and the “have-nots”nots”

The “have-nots” were the proletariat The “have-nots” were the proletariat (working class.(working class.

Marx felt the proletariat would lead Marx felt the proletariat would lead a revolution against Capitalisma revolution against Capitalism

Marx and Engles wrote a pamphlet Marx and Engles wrote a pamphlet called the called the Communist Manifesto Communist Manifesto