New Economic Theories

Mercantilism

• previously the most popular economy

• import as little as possible• export as much as possible

• having colonies was almost imperative for this economy to thrive

INSTRUCTIONS• Read the page about your theory.• Discuss with your group members what you

feel are the most important parts of the theory.

• Consider these questions:– What are advantages to your theory?– What does your theory believe?– What might be some disadvantages to your

theory?

• After about 15 minutes, groups will present the basic, important fact of the theories.

Capitalism (Theory A)

• individual people have the right to own private property

• the government protects these individual rights

~ another name for this is laissez-faire economics

Capitalism (Theory A)

• economic activity should not be regulated by the government

• economies using this theory have markets based on competition

~ businesses compete for sales/profit

Capitalism (Theory A)

• competition in the economy means that prices are often lower

• competition also means that items are probably of better quality

• when one business has most control of an industry monopoly

Socialism (Theory B)

• government controls all means of production

• this theory promises:~ economic equality

~ getting rid of poverty~ abolishing the need for money

Socialism (Theory B)

• a place that used this theory might have for the people:

~ a non-profit store~ decent houses~ good working conditions

Socialism (Theory B)

• government would decide when & how much of what to produce

~ products may not be of the best quality

Communism (Theory C)

• very similar to Theory B

• Theory B is good, but that it will take too long to implement

~ wealthy people = big problem

Communism (Theory C)

• the majority of people need to revolt & govern themselves

• the people would control all of the means of production

Communism (Theory C)

• if the people control the government, they control the economy

• this theory focuses on “fairness”~ a person doing heavy labor

should not receive less pay than a person working in an office

Look at your notes…

• Which theory do you think sounds best or worst? Which kind would you want to use if you could choose? WHY?

• With a partner, take turns writing on a sheet of paper (like you’re writing a note). Write about which theory you think is best or worst & why you think it is best or worst.

ExamplePerson #1 “I think Theory ___ is the best theory.”

Person #2 “I think Theory ___ is the best theory. Why do you think Theory ___ is best?”

Person #1 “I think Theory ___ is best because ___. Why do you think Theory ___ is best?”

Person #2 “I think Theory ___ is best because ___.

• Theory A = Capitalism

• Theory B = Socialism

• Theory C = Communism