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Journal
• What negatives can result from reducing
tariffs between the United States and
Mexico? (A.K.A. NAFTA)
• Answer and date
Chapter 18 Concepts
• Use p. 492 - 494 to
complete the following:
1. Capitalism:
– Define:
– 6 Advantages:
– 3 Disadvantages:
2. Socialism:
– Define:
– 2 Advantages:
– 3 Disadvantages:
3. Communism:
– Define:
– Characteristics:
– 4 Disadvantages:
Journal
• What people does pure capitalism tend to
ignore? Explain.
• 3 sentences and date
Chapter 18
Section 1
Spectrum of Economics Systems
I. Capitalism
A.
Means of production are privately owned
B.
Supply & demand determine price
C.
Businesses are free to direct resources into profitable
activities
D.
Advantages:
1.
2.
3.
4.
E.
Efficiency
Freedom
Smaller role of government
High degree of customer satisfaction
Disadvantages:
1.
2.
3.
Does not provide for production of many public goods
Produces only for those who have resources to pay for
products & services
Often uncertain & unstable
How can capitalism help you achieve your goals? How could it
hurt them?
II. Socialism A. Government owns & runs some of the
basic productive resources in order to
distribute output to meet social goals
B. Advantages:
1. Distribution of benefits
2. People use electoral power to influence
economic decisions
C. Disadvantages:
1. Lowered efficiency
2. High taxes
3. Government substituting its judgment for
the judgment of the market
Can economic socialism and political democracy coexist?
III. Communism A. Selfless society: what is better for
the country, not just for me?
B. State owns all economic goods
C. Government answers all questions
of what, how, and for whom
D. Disadvantages:
1.
2.
3.
4.
Not freedom
Incentive to work can be lost
Fails to meet needs & wants of all
Lacks flexibility to deal with day-to-day
changes
Are there any advantages to a communist society?
Journal
• In your opinion, could communism work?
Why or why not?
• 3 Sentences and date
Chapter 18
Section 2
Rise & Fall of Communism
I. Economy A. Lenin took estates from rich & gave
Under
them to the poor, outlawed private
Lenin &
property, and gave factories to workers
Stalin
1. Many workers inexperienced, had to
implement many capitalist ideas
B. Stalin’s 5 yr plan achieved rapid
industrialization
C. Stalin forced common ownership of all
enterprises
1. Rebellion = killed or imprisoned
Many people liked Lenin more than Stalin. Why?
II. Soviet
A. After death in 1953, Soviet
Economy After
economy had become an industrial
Stalin
power
B. Central planning authority was very
intense = how many, what type
(styles, sizes, widths), who should
produce it, where?
C. Farming- distributed by
government according to their work
Karl Marx felt that people would naturally take over the
economy in a capitalist state. Is this true?
III. Soviet
A. Progress, but still lagged behind the
Economy
U.S
Collapses
B. Piecework & quotas resulted in poor
goods
C. Gorbachev & Yeltsin tried to make
changes by implementing market
economy ideas, failed & economy
collapsed
Why would people in the Soviet Union want Gorbachev to fail?
Who would these people most likely be?
Chapter 18
Section 3
Transition to Capitalism
I. Problems A. Privatization- converting state owned
of
property to private citizens
Transition
1. Vouchers to auction off factories/property
2. Sold
B. Communist leaders were removed
from power and replaced by capitalists
C. Long process- don’t have the items
that cushion economic instability (SS,
welfare, unemployment benefits)
What are the costs to individual workers of making the
transition from a command economy to a capitalist one?
II. Countries &
Regions in
Transition
A. Privatization in Russia underway
B. Poland, Hungary, Czech Republic
and the Baltic States are moving
toward capitalism
C. Mexico is opening markets
D. China has introduced privatization
of industries & market reforms
Chapter 18
Section 4
Faces of Capitalism
I. Japan
A. Capitalist, but government is very involved
1. Limiting foreign goods = high prices
B. Great loyalty
C. 3rd largest economy, GDP = 38% of the U.S
D. 1996-97: bad loans to consumers led to a
banking crisis
E. Working to implement more reforms to protect
economy
II. Asian Tigers
A. Hong Kong- almost a perfect market
economy, until 2001 slow down
B. Singapore- tax breaks, gov subsidies
& gov training to develop technology
C. Taiwan- centralized planning
D. South Korea- still adapting to
competition
Is it important for a country to develop its own
technology?
III. Sweden A. Mixed economy
B. Steep taxes to pay for welfare benefits
C. Heavy tax has hurt their growth
High taxes in Sweden provided such supports as generous
maternity leave, education, disability and old-age benefits.
How might the country preserve these benefits without
overburdening taxpayers?