intro to economic systems - elizabethtown area school ... · intro to economic systems what is a...
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IntrotoEconomicSystems
Whatisa“market”?Whatisa“commandeconomy”?Whatisa“freemarketeconomy”?
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Whatisa“market”?
• Amarketisanareawherebuyers&sellerscanexchangeeconomicproducts(“voluntaryexchange”)– Buyers=Goods– Sellers=Services
• AcircularflowmodelisoHenusedtorepresentit
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Whatare“economicsystems”?
• EconomicsystemsarewaysthatsocieIesanswerthose3BIGQUESTIONS– What?– How?– ForWhom?
• GovernmentareoHenentrustedwithdevelopingthesesystems
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Whendidthedebateovereconomicsystemsbegin?
• ThedebatebeganduringtheIndustrialRevoluIon– Late-1700’s-1800’s
• QuesIonsoverhowinvolvedagovernmentshouldbeinaneconomy
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Whatwerethetwosidesinthisdebate?
• Laissez–faireCapitalists• AdamSmith• DavidRicardo
• “Laissez-faire”• “Handsoff”
• Governmentshouldnotinterferewiththeeconomy• Lettheeconomyworkthingsoutonitsown
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AdamSmith’s“InvisibleHand”
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Whatis“freeenterprise”?
• Freeenterprise(modern-capitalism)iswhereindividualscontroltheresources&decidehowtheyareused– Businessowners
• Governmentplaysalimited/norole
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“HandsOff”Economics
Pros
ù Economy moved more freely ù Best “minds” making the decisions ù Less chance of a major mistake
Cons
ù No control…
ù Not everyone’s needs / “voices” are heard
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• TheSocialistMovement• CharlesFourier
• Believedgovernmentshouldcontrolcertainfactorsoftheeconomy• Factories,mills,railroads,etc.
• Governmentownershipwouldhelpworkers&eliminategreedybusinessowners
Whatwerethetwosidesinthisdebate?
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• TheMarxistMovement• KarlMarx• FrederichEngels
• MoreradicalformofSocialism– Believedinawarbetweentheclasses
– Completegovernmentcontroloftheeconomy
Whatwerethetwosidesinthisdebate?
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Marx’sEarlyLife
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Marxandhiswife,JennyvonWestphalen
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MarxtheFinancialMess…
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Duringtheirclosefriendship/partnershipofover30years,EngelsandMarxwrote
severalbooksandover1,500leferstooneanother
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Whatisa“commandeconomy”?
• Acommandeconomy(plannedeconomies)iswherethegovernmentcontrolsallaspectsoftheeconomy– EconomicPlan=Whatwillbeproduced/Forwhom
• Individualshavelimited/norole
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“HandsOn”Economics
Pros
ù More control = max. payoff!!!! ù More fairness for workers / business ù More ability to tax / enrich the gov.
Cons
ù Could things get worse?
ù Could government abuse such power?
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WouldMarxfitin?“…whatiscertaintomeisthat[iftheyareMarxists,
then]Iamnot[a]Marxist…"