Capitalism

Capitalism is an economic system that was created by Adam Smith in the late 18th
Century (1700’s) and laid out in his book, The Wealth of Nations. The main
concept of Capitalism is that the economy should not be controlled or interfered
with by governments; the economy works better when it is in the hands of
competing individuals and companies that are fighting to make the highest profit
possible for themselves. These individuals were known as entrepreneurs and
they were in control of money, land, factories, etc. (Smith called these things
Capital, hence the name Capitalism). Capitalism worked like a machine, with
workers using the entrepreneur’s capital to produce goods and services, and the
workers would in term get paid for their work. Workers could then use their
wages to pay for other items leading to a healthy economy and hopefully
(according to Smith) leading to an increased standard of living.

Socialism
Socialism arose as a response to the problems of Capitalism. While some became
wealthier, many remained seemingly stuck in poverty. The gap between the rich
and the poor seemed to be increasing. Socialists believed that the best way to
combat this, and help raise the standard of living for the poor workers was for
the government to step in and take partial control over the economy. People
would still be allowed to produce goods and run businesses, but the government
would ultimately make decisions, thus eliminating the competition of Capitalism
that many believed was driving wages for the poor workers down. Socialists
believed that society should be based primarily on cooperation, rather than
competition. Some even broke off from society to start “Utopias,” which were
communities where everyone worked together to make a living outside of the
economy.

Communism
Communism was created by Karl Marx, a German philosopher, in the mid-19th
century (1800’s). He believed that all of human history could be defined as a
battle over resources. In his works Das Kapital and The Communist Manifesto,
Marx outlined how he believed this struggle could be overcome. Marx believed
that change could only happen through revolution, where the poor workers (he
called the proletariat) rose up against the business owners (he called the
bourgeois). After the revolution the wealth of the rich would be redistributed to
the workers until everyone was completely equal. Because the goal was ultimate
equality, Marx believed that no one should hold property, and government would
eventually cease to exist as well.
1. Capitalism referred to those that had control over resources as
_________________ while Communists referred to them as ___________________.

2. Name at least one way in which Socialism and Capitalism are

similar. Name two ways in which they are different.

3. What are the major differences between Communism and

Socialism? Name at least two. In what ways are they similar?

4. What are the major differences between Capitalism and

Communism? Name at least two.

5. What were some of the major positive effects of Capitalism? What

were are some possible problems?
6. What do you believe were some positive ideas of Socialism? Were
there ideas that don’t seem like they would have good outcomes? What
are these?

7. What are some ideas put forth by the Communist system that you
might agree or disagree with? Explain.

8. Overall, which system do you think would work best (either for you
personally or society at large)? Why do you think this particular
system would work best?

9..Which of the three systems do you believe would work the worst?
Explain.