CHAPTER 22 Section 1: Capitalism Section 2: Socialism Section 3

HOLT, RINEHART AND WINSTON

HOLT

Section 1: Capitalism Section 2: Socialism Section 3: Communism

CHAPTER 22

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Comparing Political and Economic Systems

Section 1: Capitalism

Objectives:  What are the four factors of production?  In what way is a free-market economy an essential

aspect of capitalism?  How do supply and demand, competition, and the

profit motive affect capitalist economies?  How does the U.S. economy differ from Adam

Smith’s ideas of capitalism?

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The four factors of production:  natural resources  human resources  capital resources, such as money and equipment  entrepreneurship

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How a free-market economy is an essential aspect of capitalism:  allows self-interest to drive production and

consumption  provides for little government involvement on what is

produced or how or for whom it is produced  provides for consumers choice in the purchase goods

and services, which therefore affects how goods and services are bought or sold

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Effects on capitalist economies:  supply and demand—affects product price levels and

therefore competition and profits  competition—pressures producers to improve their

products to attract buyers  profit motive—drives producers to maintain high

profits to encourage investment

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How the U.S. economy differs from Adam Smith’s ideas of capitalism:  Smith argued against government intervention.  The U.S. economy encourages growth through fiscal

policy and is based on a limited role of the government.

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Section 2: Socialism

Objectives:  What are some of the basic principles of socialism?  What are some countries that have strong socialist

traditions?  What is a welfare state?

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Basic principles of socialism:  Redistributing wealth throughout society reduces

inequalities in the standard of living.  The government or the people as a whole controls the

factors of production and distribution of goods.

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Some countries that have strong socialist traditions:  Israel  Sweden  Australia

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A welfare state is a government that provides widespread social services paid for by taxes.

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Section 3: Communism

Objectives:  What are some of the basic principles of communism

as described by Karl Marx?  How did Vladimir Lenin’s concept of communism

differ from that of Marx?  What changes occurred in the Soviet Union under

Joseph Stalin?  Why did the Soviet Union eventually dissolve?

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Some basic principles of communism as described by Karl Marx:  A classless society would lead to economic equality.  Workers would overtake and control the means of

production.  With a classless society, government would become

unnecessary and disappear.

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How Vladimir Lenin’s concept of communism differed from that of Marx:  emphasized politics over economics  did not believe that a country had to be fully

industrialized before revolution could occur  created a dictatorship over the proletariat rather than a

dictatorship of the proletariat

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Changes in the Soviet Union under Joseph Stalin:  used force in the collectivization of agriculture to

institute his Five-Year Plans  focused on developing heavy industry, science, and

technology

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Why the Soviet Union failed:   The economy left by communism was too weak to compete in

the global market.   Soviet citizens began to question the effectiveness of

communism because the standard of living for most Soviet citizens increased more slowly than in major free-market nations.

  Governments that the Soviet Union set up in Eastern Europe had failed.

  The reforms introduced by Gorbachev helped the Soviet people to see what life might be like without communism.


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1. What are the four basic principles on which capitalist economies are based?

2. What is the government’s role in a capitalist economy?

3. Name three characteristics of a socialist economy.

4. On what principles is socialism based?


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5. What two concepts are central to Marx’s theory of social change?

6. Why did Lenin establish a communist dictatorship after the Russian Revolution?

CHAPTER 22 Section 1: Capitalism Section 2: Socialism Section 3

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Transcript of CHAPTER 22 Section 1: Capitalism Section 2: Socialism Section 3