Capitalism versus Marxism

2 Economic Ideas that come out of the Industrial Revolution

Capitalism

I. What is Capitalism?

• An economic system

• Money invested in business w/ goal of making a profit

• Economic system of: America, Britain, France, Canada

II. Basic Concept of Capitalism

1. Capitalism based on “Laissez-faire”Translated: “to let be”

2. Idea: Allow the owners of factories or businesses to establish working conditions

3. Key: No government control or regulation

How will this be best for the people of Britain?

III. Creator of Capitalist System

Adam Smith (1723-1790)1. Wrote The Wealth of Nations, published in 1776

Key Ideas of the book:1. Free market (no gov’t rules or laws)2. Economy would be guided by an “invisible

hand”3. Division of labor4. Smith argued that humans are greedy &

selfish5. Competition would benefit society as a whole

V. Two Overall Arguments of the Capitalistic Thinkers:

1. Opposition to government intervention in the economy

2. Minimum wage laws & regulation of working conditions would lower profits

Communism/Marxism

Marxism• An economic & philosophical systemAn economic & philosophical system

– Opposes ideas of capitalismOpposes ideas of capitalism

• Arose due to poor conditions of the Arose due to poor conditions of the Industrial RevolutionIndustrial Revolution

• Also known as: Socialism, CommunismAlso known as: Socialism, Communism

Basic Ideas of Marxism

• No private property No private property – All property is to be owned collectively as a All property is to be owned collectively as a

societysociety

• Value of what is produced goes to the Value of what is produced goes to the worker worker

• All goods (money, goods, products) is to All goods (money, goods, products) is to be shared equallybe shared equally

Creators of Marxist System

• Karl Marx (1818-1883) & Friedrich Engels (1820-1895)

• Both were German• Both lived during the Industrial era• As a result, they became very angry about:

– Exploitation or mistreatment of workers– Unequal distribution of wealth

• Co-authored The Communist Manifesto, published in 1848

• Key Ideas of the book:– Industrial society had two classes

• Bourgeoisie – middle class, the “haves”• Proletariat – working class, the “have-nots”

– Marx & Engels predicted that:• Wealth/power is controlled by middle class, or the

bourgeoisie (factory owners, industrialists, etc)• The working class, or the proletariat would grow angry at

their mistreatment• The working class would unite & overthrow the middle

class in a violent revolution • Workers would seize control of factories • All wealth & resources would distributed equally• A classless society would emerge• Eventually, all resources (land, factories, mines,

businesses) would be owned & controlled by the people– This is known as Communism

The Communist Manifesto

Long-Term Effects of Marxism

• Ideas inspired future leaders & sparked revolutions– Russia: (1917-1991)

• Vladimir Lenin & Joseph Stalin

– Cuba: (1959 – present)• Fidel Castro & Ernesto ‘Che’ Guevara

– North Vietnam: (1954 – present)• Ho Chi Minh

– China: (1949 – present)• Mao Zedong

– North Korea: (1948 – present)• Kim Il-Sung & Kim Il-Jong