chapter 23: comparative economic systems section 2

Chapter 23: Comparative Economic Systems

Section 2

Chapter 23: Comparative Economic Systems

Section 2

Copyright © Pearson Education, Inc. Slide 2Chapter 23, Section 2

ObjectivesObjectives

1. Summarize the theories of Karl Marx and their roots.

2. Identify important characteristics of socialist economies.

3. Outline the characteristics of communist economies.

4. Describe socialism and communism in action today.

5. Evaluate the effects of socialism and communism.


Key TermsKey Terms

• The Communist Manifesto: a political document written by Karl Marx and Friedrich Engels in 1848

• socialism: a political system that seeks economic equality through peaceful and democratic means

• communism: a political system that supports violent revolution and class struggle as a way of achieving economic equality

• welfare state: a country that provides extensive social services at little or no cost to consumers


Key Terms, cont.Key Terms, cont.

• command economy: a state in which government officials plan all economic development

• five-year plan: an economic plan outlining how the government wants the economy to develop

• collectivization: the process of merging private farms into large state-owned agricultural enterprises

• privatization: the process of returning state-owned enterprises to private ownership

• Great Leap Forward: a failed 1958 plan to modernize China by eliminating all free enterprise


IntroductionIntroduction

• What is the role of government in socialism and communism?– The government runs a command economy,

making long-term economic plans and guiding development.

– The state owns many or all industries.– The state provides extensive public welfare

services. – Government acts to limit the role of free

markets and competition.


Karl MarxKarl Marx

• Checkpoint: Why was Karl Marx important?– Marx was the founder of modern socialism

and communism.– In The Communist Manifesto, Marx called

for the working class to overthrow all capitalist governments.

– His theory, Marxism, advanced four key concepts: a theory of history, the labor theory of value, the role of institutions, and the dictatorship of the proletariat.


Marx’s TheoryMarx’s Theory

• History: Marx believed that all history is the story of wealthy social classes oppressing poor social classes as they compete for labor and property.

• Labor: Marx believed that goods are worth only as much as the labor put into them, and the worker should receive that full value.

• Institutions: Marx claimed that the state and other social institutions kept capitalists in power.


Marx’s Theory, cont.Marx’s Theory, cont.

• Proletariat: After the revolution, Marx said a state representing the people would pave the way for a free society without social classes in which the people own all property in common.

• Those who believed that Marx’s goals of economic quality could be achieved through democracy became known as socialists.

• Those who argued that class struggle and violent revolution were needed became known as communists.


SocialismSocialism

• Checkpoint: What defines a socialist economy?– The nationalization, or government takeover, of

large private companies in key industries.

– The provision of free public welfare services such as pensions, healthcare, housing, and university educations.

– High levels of taxation on income and consumer goods.

– A command economy with many economic decisions made by the government.


Socialism TodaySocialism Today

• Socialist parties remain influential in Europe. – However, these parties have had to give up some

socialist goals that proved too expensive or unpopular.

• Socialist parties are growing in influence in Africa and Latin America.– Governments in these areas can gain popular

support by nationalizing foreign-owned industries, redistributing land from the wealthy to the poor, and promising more social services.


CommunismCommunism

• Checkpoint: What defines a communist economy?

– The Communist Party officially controls the government and the economy and effectively controls much of society.

– All production for factories, farms, and stores is centrally planned, as are the prices and distribution of goods.

– The state owns all agriculture and industry.


Marxist EconomiesMarxist Economies


The Soviet UnionThe Soviet Union

• Russia staged the first communist revolution in 1917, creating the Soviet Union.

• Communist leaders collectivized farms and promoted heavy industries.

• Communist Party members had an elite status.


The Soviet Union, cont.The Soviet Union, cont.

• Free government services such as education and health care were provided but were of poor quality. There was little housing and few consumer goods.


• In 1991 the Soviet Union dissolved as a result of political and economic reforms. Many state-owned companies were privatized. Today, Russia has a mixed economy.

The Soviet Union, cont.The Soviet Union, cont.


ChinaChina

• The Communist Party’s efforts to get rid of free enterprise and modernize China’s economy had little success.

• The Communist Party remains in power but now allows much private enterprise and a market economy, with better results.


Other Communist NationsOther Communist Nations

• There are few other communist economies today.– Cuba has struggled without Soviet economic

aid.– Vietnam and Laos have both adopted some

free market reforms to promote economic growth, similar to China.

– North Korea’s communist economy functions very poorly, with large food shortages and little economic growth.


Command EconomiesCommand Economies

• Checkpoint: How successful have command economies been?– Critics say that command economies are

inefficient and stifle initiative and innovation by taking away freedom of choice and not rewarding hard work.

– Supporters say that these systems are fairer to workers and communities, have fewer inequalities of wealth and power, and do a better job of providing basic needs for everyone.


ReviewReview

• Now that you have learned about the role of government under socialism and communism, go back and answer the Chapter Essential Question.– To what extent should governments

participate in the economy?

chapter 23: comparative economic systems section 2

Documents

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free enterprise slide

karl marx important

karl marx checkpoint

theories of karl marx

theory of history

social institutions

role of government