Adam Smith vs Karl MarxAdam Smith vs Karl Marx

Who’s the man with the Who’s the man with the economic plan?economic plan?

Adam SmithAdam Smithindividuals own the individuals own the means of production means of production (factories, machines, (factories, machines, land) and reinvest land) and reinvest profits as profits as capitalcapital to to expand businessexpand business

Capital Capital – wealth that is – wealth that is invested in order to invested in order to create more wealthcreate more wealth

Adam Smith- Adam Smith- The Wealth of NationsThe Wealth of Nations

Laissez-faire- (let do) Laissez-faire- (let do) non-interference of non-interference of the government in businessthe government in business

HANDS OFF!HANDS OFF!

CapitalismCapitalism

Free Market EconomyFree Market Economy – One in which – One in which consumer choice, the law of supply consumer choice, the law of supply and demand and competition drives and demand and competition drives companies decisions regarding what companies decisions regarding what products to produce and the prices of products to produce and the prices of those products.those products.

Adam SmithAdam Smith3 Laws3 Laws

Law of CompetitionLaw of Competition

Law of Self InterestLaw of Self Interest

Law of Supply and DemandLaw of Supply and Demand

SocialismSocialism

a theory or system of social a theory or system of social organization that promotes:organization that promotes:

that the community as a whole that the community as a whole should own and control of the means should own and control of the means of production (factories / land)of production (factories / land)

profits from production should be profits from production should be divided amongst the community as a divided amongst the community as a wholewhole

Socialism ContinuedSocialism Continued

Believe capitalist take advantage of Believe capitalist take advantage of workersworkers

Community or state (gov’t) must act Community or state (gov’t) must act to protect workersto protect workers

Unequal distribution of wealth is Unequal distribution of wealth is unfair (caused by capitalism)unfair (caused by capitalism)

Goods should be divided according to Goods should be divided according to each person’s needseach person’s needs

Karl Marx and Freidrich EngelsKarl Marx and Freidrich EngelsThe Communist ManifestoThe Communist Manifesto

HavesHaves Have-notsHave-nots

PatricianPatrician PlebeianPlebeian

Noble Noble SerfSerf

1st & 2nd 1st & 2nd EstatesEstates

33rdrd Estate Estate

BourgeoisieBourgeoisie ProletariatProletariat

The New StruggleThe New Struggle

BourgeoisieBourgeoisie = owners of business, = owners of business, capital and means of productioncapital and means of production

ProletariatProletariat = working classes, own = working classes, own nothingnothing

Karl Marx (and F. Engels)Karl Marx (and F. Engels)The Communist ManifestoThe Communist Manifesto

Radical Socialism or MarxismRadical Socialism or Marxism

Workers will seize control of the Workers will seize control of the government and businessesgovernment and businesses

““Dictatorship of the Proletariat”Dictatorship of the Proletariat”

Workers would take control of the Workers would take control of the governmentgovernment

Then what…Then what…

redistribute profits equallyredistribute profits equally

own all property in common (no own all property in common (no private property)private property)

Socialism Socialism Communism Communism

““From each according to his ability, From each according to his ability, to each according to his need” (all to each according to his need” (all must work, all share in profits)must work, all share in profits)

Economic equality (no more classes)Economic equality (no more classes)

No government or police would be No government or police would be needed in a community of equals needed in a community of equals where all is shared government where all is shared government would fade away would fade away Communism Communism

““Communist” Countries TodayCommunist” Countries Today

““Communism” = DictatorshipCommunism” = Dictatorship

never moved passed Marx’s never moved passed Marx’s Dictatorship of the Proletariat stageDictatorship of the Proletariat stage

ExamplesExamples– Former USSR (Soviet Union)Former USSR (Soviet Union)– ChinaChina– CubaCuba– North KoreaNorth Korea

Socialist Countries TodaySocialist Countries TodayTend to be democraciesTend to be democracies

Major Industries owned by the people Major Industries owned by the people (Railways, Telephones, TV stations etc.)(Railways, Telephones, TV stations etc.)

Government taxes provide benefits to all Government taxes provide benefits to all citizens (healthcare, free higher education, citizens (healthcare, free higher education, pensions (retirement), Social securitypensions (retirement), Social security

Examples:Examples:

France, Canada, EnglandFrance, Canada, England

What system would they support?What system would they support?For the following people decide whether For the following people decide whether they would support:they would support:

SocialistsSocialists - All means of production and all - All means of production and all profits are owned by the community profits are owned by the community together (Owen, Marx) together (Owen, Marx) Laissez-Faire CapitalismLaissez-Faire Capitalism - Government - Government should keep its hands off business and should keep its hands off business and allow owners to act in their own self allow owners to act in their own self interest to seek profit (Smith, Malthus and interest to seek profit (Smith, Malthus and Ricardo)Ricardo)

Donald TrumpDonald TrumpIf you don't make him a profit “YOU'RE FIRED!”

Robin HoodRobin HoodRobs from the rich and gives Robs from the rich and gives to the poor (ie redistribution to the poor (ie redistribution of wealth).of wealth).

Papa SmurfPapa SmurfLeads a self-Leads a self-sufficient sufficient community of little community of little blue people living blue people living in harmony. All in harmony. All members of the members of the community work community work together to meet together to meet their needs. All their needs. All have an equal have an equal share.share.

GargamelGargamelHe is in constant He is in constant pursuit of wealth pursuit of wealth and doesn't care and doesn't care how many little how many little Smurfs had to die Smurfs had to die to make him rich. to make him rich. In fact he thought In fact he thought he could turn he could turn Smurfs into Smurfs into gold...hmmmmm…gold...hmmmmm…