1	Development Models Market Systems Command Systems See Overhead Chart
2	Origins of Capitalism It became the dominant economic system in Europe and the United States in the 1800’s During the Middle Ages, manorialism declined and that led to the expansion of trade. Prosperity and population growth also led to this expansion.
3	Karl Marx Hegel Dialectic Thesis/Antithesis/Synthesis Marx Bourgeoisie Proletariat
4	Origins Over time, the power of the landowners began to go downhill. As the merchants gained more power, the kings grew stronger politically and were increasingly able to form centralized governments. This resulted in the need for national currencies and a banking system.
5	Mercantilism This was defined as the nation’s power in terms of gold and silver The people of this time that a country could only gain more power by gaining more wealth. This type of power required a steady source of raw materials.
6	Mercantilism This encouraged European nations to establish trading posts and colonies around the world. The leaders of these nations then established trade monopolies and introduced trade barriers to maintain control over the supplies of raw materials.
7	Capitalism Today Governments in capitalist economy’s provide law enforcement, education, and environmental protection.
8	Capitalism in Japan Ministry of International Trade and Industry (MITI) Ministry of Finance Set tariffs to limit goods from other countries.
9	Capitalism in Germany Economy is fourth largest in the world Social welfare programs Two commissions to coordinate budgets of the federal, state, and local governments in an effort to promote economic stability Low inflation rates
10	Capitalism in France Post war period. Indicative planning: General Planning Commission 5 year plans, but not mandatory President Francois Mitterrand. Socialist. 1981 Nationalization: iron, steel 1/3 control of total economic output by 1983 1993 Privatization
11	Capitalism in South Korea Korea Development institute (KDI) Offer incentives to businesses
12	Socialist Economic Systems In Socialist economies, the government owns most or all of the capital and most of the production is run by the government There are two different types of economic socialism, market and command
13	Command Socialism Command socialism combines state ownership with state decision making Soviet Union is was an example of Command Socialism
14	Market Socialism Market socialism has government control of industries with some decisions made by individuals Yugoslavia practiced this form of socialism
15	Karl Marx
16	Theories of Karl Marx Outlined ideas for Communism Wrote Communist Manifesto and Das Kapital Communism - form of Socialism used in in Soviet Union and People’s Republic of China
17	Rise of the Bourgeoisie “middle class” merchants gained power and challenged ruling class their success led to creation of capitalist economies in the late 1700s
18	Rise of the Proletariat During Industrial Revolution bourgeoisie held control of production and became oppressors of working class - the proletariat wealth of bourgeoisie grew and wages of proletariat remained low class struggle would lead to overthrow of bourgeoisie in a revolution
19	Destruction of Capitalism Marx expected the working class to form a government that would follow through with the final destruction of capitalism called the “dictatorship of the proletariat”. He wanted a classless society to develop where everyone would be equal and have joint ownership in production.
20	Simplification of History Marx ignored political forces focusing all events to a class struggle. He also stated that capitalism would eventually deteriorate the standard of living for workers. Marx’s beliefs were never applied to the future Soviet Union, where in fact there was no equality because of existing dictators. It wouldn’t be till 1991, when the people would finally get the freedom that they deserved.
21	Rise of Communism Communism came to power in Russia in the early 1900’s under the leadership of Lenin Communism broke up large estates and nationalized land The government took control of the factories, and instituted a forced labor policy
22	Communism New Economic policy- Lenin 1921 Stalin took over in 1924. He got rid of private property and instituted strict central planning He came up with a series of Five Year Plans which set up long term economic goals and allocated strict resources and also set quotas for increased production.
23	Communism Production problems- under Stalin Communist regime, emphasis was placed on the production of industrial and military goods instead of consumer and agricultural goods. Agricultural productivity was low because of shortages in capital, lack of incentives because of the quota system, and harsh climate
24	Lenin
25	Collapse of the Soviet Union In the 1970s and the 1980s the Soviet economists began to see that the Soviet Union would not survive without any elements of a market-based system. Mikhail Gorbachev was the first general secretary of the Communist Party to institute reform.
26	Perestoika or Reconstruction Gorbachev effort to move toward market-socialism. Soviet bureaucrats prevented its success. Gorbachev compromised and tried to seek more modest reforms. Glasnost, openness
27	Perestoika or Reconstruction In order to appease bureaucrats, Gorbachev left the communist system in place, but allowed prices for some output to be negotiated between firms that produced the goods and firms that purchased them. Ownership of enterprises and the shortages from bad management of output remained.
28	Perestoika or Reconstruction Gorbachev instituted dramatic price increases in order to deal with the shortages, but the price hikes did little to correct the shortages. In the summer of 1991, leaders opposed to economic reform tried to overthrow Gorbachev. The republics of the Soviet Union took advantage of the chaos and declared their independence.
29	People’s Republic of China Recently the Republic of China has moved towards a more market responsive communism. This is a direct result of the over-centralized economic planning and followed years of government involvement in the economy.
30	People’s Republic of China Sun Yet-sen Chiang Kai-shek Mao tse-Tung (Mao Zedong)
31	Great Leap Forward In 1953, the Chinese communist launched the first five year plan stressing industrial development. With aid of the Soviet Union, China gained economic success. The second five year plan was called the “Great Leap Forward”
32	Cultural Revolution Chaos between 1966 and 1976 was the Cultural Revolution. A violent movement to protect the communist system the leaders denounced party officials, factory managers, scientists, teachers, and college professors
33	Four Modernizations Targeted modernizations in agriculture, industry, science, and technology, and defense. Household responsibility system was an agricultural reform aka. Contract responsibility system permits peasants to lease state owned land and rent by giving crop to the government.
34	Challenges for China China has a two tiered economic system- with a central command system and a market system operating at the margin. China now has one of the fastest growing economies in the world. Because of the huge population, the per capita income is low, while the economy is the 2nd largest.
35	People’s Republic of China Recently the Republic of China has moved towards a more market responsive communism. This is a direct result of the over-centralized economic planning and followed years of government involvement in the economy.
36	Great Leap Forward In 1953, the Chinese communist launched the first five year plan stressing industrial development. With aid of the Soviet Union, China gained economic success. The second five year plan was called the “Great Leap Forward”
37	Cultural Revolution Chaos between 1966 and 1976 was the Cultural Revolution. A violent movement to protect the communist system the leaders denounced party officials, factory managers, scientists, teachers, and college professors
38	Four Modernizations Targeted modernizations in agriculture, industry, science, and technology, and defense. Household responsibility system was an agricultural reform aka. Contract responsibility system permits peasants to lease state owned land and rent by giving crop to the government.
39	Challenges for China China has a two tiered economic system- with a central command system and a market system operating at the margin. China now has one of the fastest growing economies in the world. Because of the huge population, the per capita income is low, while the economy is the 2nd largest.
40	Market Socialism in Sweden Industry Ownership Sweden’s government controls shipbuilding steel production part of the national railroad network broadcasting systems hydroelectric facilities Volvo, Electrolux and other private firms control 90% of industry
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42	Socialism in Sweden Workers’ Freedoms Sweden’s workforce is one of the most unionized of industrial nations More than 80% of workers belong to unions as opposed to the 15% of Americans and 26% of Japanese Workers are often included in decision making
43	Socialism in Sweden Economic Planning Representatives of the government, labor unions, industry, and agriculture negotiate together to develop annual plans that set production and employment targets
44	Socialism in Sweden Taxation High taxes Programs including: health insurance unemployment insurance retirement benefits free education through college subsidized public housing child care
45	Swedish Parliament http://www.riksdagen.se/index_en.asp
46	Sweden Sweden affected by the Recession of the early 1990s Worst there since 1930s Limits added to welfare system Some privatization occurred
47	King Karl XVI Gustaf