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Session-IIUnit-IBy: Ruturaj Baber
Definition of Capitalism 
Capitalism is… 
•an economic system 
•investmentin and ownershipof the means of production, dist...
Pros and Cons of Capitalism 
Pros 
•Competition to provide goods and services keeps prices low 
•Rewards hard work 
•Provi...
CAPITALISM 
1. Private Ownership: Capital belongs to individuals who are FREE to do what they wish with it. For this reaso...
CAPITALISM 
2. Profit Motive: based on the economic laws of supply and demand, when enough people want something, producer...
CAPITALISM 
•3. Market Economy: a money value can be placed on everything in the marketplace: land, goods, time, and labor...
Types of capitalism 
•Mercantilism 
•Free-market economy 
•Social-market economy 
•State capitalism 
•Corporate capitalism...
Mercantilism 
•It is characterized by the intertwining of national business interests to state-interest and imperialism. 
...
Free-market economy 
•Free-marketeconomyreferstoacapitalisteconomicsystemwherepricesforgoodsandservicesaresetfreelybythefo...
Social-market economy 
•Asocial-marketeconomyisanominallyfree-marketsystemwheregovernmentinterventioninpriceformationiskep...
State capitalism 
•Itconsistsofstateownershipofthemeansofproductionwithinastate,andtheorganizationofstateenterprisesascomm...
Corporate capitalism 
•Corporatecapitalismisafreeormixed-marketeconomycharacterizedbythedominanceofhierarchical,bureaucrat...
Definition of Socialism 
According to Merriam-Webster, Socialism is… 
•Government ownership and administrationof the means...
Pros and Cons of Socialism 
Pros 
•All members share benefits 
•Those who cannot contribute may still participate (disable...
Types of Socialist Economy 
•Socialist planned economy 
•Market socialism 
Ruturaj Baber MBA-I 15
Socialist planned economy 
•State-directedeconomy 
•Astate-directedeconomyisasystemwhereeitherthestateorworkercooperatives...
Market socialism 
•Marketsocialismreferstovariouseconomicsystemsthatinvolveeitherpublicownershipandmanagementorworkercoope...
Mixed Economy 
According to dictionary.com, a Mixed economy is: 
•An economy in which some industries are privately owned ...
Mixed economy 
•Private: mobiles, cars, computers 
•Essential services: police, fire service, defence, social services. Go...
Government subsidized programs 
•Postal service 
•Rail lines 
•Libraries 
•Health care 
•Social programs 
•Roads 
•Infrast...
Pros and Cons of Mixed Economy 
•Pros 
•State provides the essential services 
•Private sector encouraged for profits 
•Co...
Capitalism vs. Socialism Vs. Mixed 
Capitalist countries: 
•America 
•Canada 
•Brazil 
•Japan 
•Mexico 
Socialist countrie...
Which is best: Capitalist economy, Socialist economy, or a Mixed economy? 
•A free market exists with some regulation by t...
THANK YOU 
Ruturaj Baber MBA-I 24
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Session ii

Socialism and Capitalism

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Session ii

  1. 1. Session-IIUnit-IBy: Ruturaj Baber
  2. 2. Definition of Capitalism Capitalism is… •an economic system •investmentin and ownershipof the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations Ruturaj Baber MBA-I 2
  3. 3. Pros and Cons of Capitalism Pros •Competition to provide goods and services keeps prices low •Rewards hard work •Provides choice •Allows for the building up of wealth and possessions •Consumers regulate the market Cons •Exploits people who cannot compete •Uneven distribution of wealth •Creates a money-oriented society •Constant economic growth may deplete the earth’s resources Ruturaj Baber MBA-I 3
  4. 4. CAPITALISM 1. Private Ownership: Capital belongs to individuals who are FREE to do what they wish with it. For this reason, capitalism is also called the “free- enterprise” system Ruturaj Baber MBA-I 4
  5. 5. CAPITALISM 2. Profit Motive: based on the economic laws of supply and demand, when enough people want something, producers make it because they want a PROFIT Ruturaj Baber MBA-I 5
  6. 6. CAPITALISM •3. Market Economy: a money value can be placed on everything in the marketplace: land, goods, time, and labor. Buyers and sellers are free to exchange goods and services at prices determined by…..”SUPPLY and DEMAND” Ruturaj Baber MBA-I 6
  7. 7. Types of capitalism •Mercantilism •Free-market economy •Social-market economy •State capitalism •Corporate capitalism Ruturaj Baber MBA-I 7
  8. 8. Mercantilism •It is characterized by the intertwining of national business interests to state-interest and imperialism. •Mercantilism holds that the wealth of a nation is increased through a positive balance of trade with other nations. Ruturaj Baber MBA-I 8
  9. 9. Free-market economy •Free-marketeconomyreferstoacapitalisteconomicsystemwherepricesforgoodsandservicesaresetfreelybytheforcesofsupplyanddemandandareallowedtoreachtheirpointofequilibriumwithoutinterventionbygovernmentpolicy. •Ittypicallyentailssupportforhighlycompetitivemarkets,privateownershipofproductiveenterprises. •Laissez-faireisamoreextensiveformoffree-marketeconomywheretheroleofthestateislimitedtoprotectingpropertyrights. Ruturaj Baber MBA-I 9
  10. 10. Social-market economy •Asocial-marketeconomyisanominallyfree-marketsystemwheregovernmentinterventioninpriceformationiskepttoaminimumbutthestateprovidessignificantservicesintheareaofsocialsecurity, unemploymentbenefitsandrecognitionoflabourrightsthroughnationalcollectivebargainingarrangements. •ThismodelisprominentinWesternandNorthernEuropeancountries,andJapan,albeitinslightlydifferentconfigurations.Thevastmajorityofenterprisesareprivatelyownedinthiseconomicmodel. Ruturaj Baber MBA-I 10
  11. 11. State capitalism •Itconsistsofstateownershipofthemeansofproductionwithinastate,andtheorganizationofstateenterprisesascommercial,profit- seekingbusinesses. •Thedebatebetweenproponentsofprivateversusstatecapitalismiscentredaroundquestionsofmanagerialefficacy,productiveefficiency,andfairdistributionofwealth. Ruturaj Baber MBA-I 11
  12. 12. Corporate capitalism •Corporatecapitalismisafreeormixed-marketeconomycharacterizedbythedominanceofhierarchical,bureaucraticcorporations. •Corporationsareusuallycalledpublicentitiesorpubliclytradedentitieswhenpartsoftheirbusinesscanbeboughtintheformofsharesonthestockmarket. Ruturaj Baber MBA-I 12
  13. 13. Definition of Socialism According to Merriam-Webster, Socialism is… •Government ownership and administrationof the means of production and distribution of goods •A system of society or group living in which there is not private property •A system or condition of society in which the means of production are owned and controlled by the state Ruturaj Baber MBA-I 13
  14. 14. Pros and Cons of Socialism Pros •All members share benefits •Those who cannot contribute may still participate (disabled, elderly) •Each member’s survival needs are met •Equal distribution of wealth •No socioeconomic classes Cons •No incentive to work harder •No competition means no reward to be innovative •New members to the community (immigrants) are seen as competition for limited goods and services •Higher taxes Ruturaj Baber MBA-I 14
  15. 15. Types of Socialist Economy •Socialist planned economy •Market socialism Ruturaj Baber MBA-I 15
  16. 16. Socialist planned economy •State-directedeconomy •Astate-directedeconomyisasystemwhereeitherthestateorworkercooperativesownthemeansofproduction,buteconomicactivityisdirectedtosomedegreebyagovernmentagencyorplanningministrythroughmechanisms •thestatewillplanlong-termstrategicinvestmentandsomeaspectofproduction. •Itispossibleforastate- directedeconomytohaveelementsofbothamarketandplannedeconomy •De-centralizedplannedeconomy •Ade-centralizedplannedeconomyisonewhereownershipofenterprisesisaccomplishedthroughvariousformsofworkercooperativesandplanningofproductionanddistributionisdonefromthebottom-upbylocalworkercouncilsinademocraticmanner. •ThisformofsocialisteconomyisrelatedtothepoliticalphilosophiesofLibertarianSocialism,SyndicalismandvariousformsofcommunalUtopiansocialism. Ruturaj Baber MBA-I 16
  17. 17. Market socialism •Marketsocialismreferstovariouseconomicsystemsthatinvolveeitherpublicownershipandmanagementorworkercooperativeownershipoverthemeansofproduction,oracombinationofboth, andthemarketmechanismforallocatingeconomicoutput,decidingwhattoproduceandinwhatquantity. •Instate-orientedformsofmarketsocialismwherestateenterprisesattempttomaximizeprofit,theprofitscanfundgovernmentprogramsandserviceseliminatingorgreatlydiminishingtheneedforvariousformsoftaxationthatexistincapitalistsystems. Ruturaj Baber MBA-I 17
  18. 18. Mixed Economy According to dictionary.com, a Mixed economy is: •An economy in which some industries are privately owned and others are publicly owned or nationalized •Many capitalist economies are mixed economies (some capitalism and some socialism) Ruturaj Baber MBA-I 18
  19. 19. Mixed economy •Private: mobiles, cars, computers •Essential services: police, fire service, defence, social services. Goods and services which can benefit both consumer and society(merit goods) •Taxes to the government •Government places limits on the nature of business activity: restricting monopoly, control pollution from factories Ruturaj Baber MBA-I 19
  20. 20. Government subsidized programs •Postal service •Rail lines •Libraries •Health care •Social programs •Roads •Infrastructure (bridges, freeways, etc.) •Can you think of any others? Ruturaj Baber MBA-I 20
  21. 21. Pros and Cons of Mixed Economy •Pros •State provides the essential services •Private sector encouraged for profits •Competition keeps prices low •Consumer choice •Inefficient business behaviorcontrolled •Cons •Heavy taxes reduce incentives to work hard or make profits •Less efficient than private sector •Excessive control over business activity can add costs and discourage enterprise Ruturaj Baber MBA-I 21
  22. 22. Capitalism vs. Socialism Vs. Mixed Capitalist countries: •America •Canada •Brazil •Japan •Mexico Socialist countries: •Cuba •Saudi Arabia •Iran •North Korea •Burma Mixed Economies: •India •China •Malaysia Ruturaj Baber MBA-I 22
  23. 23. Which is best: Capitalist economy, Socialist economy, or a Mixed economy? •A free market exists with some regulation by the government •People can create their own businesses and make a profit •All businesses pay taxes, which benefit everyone Ruturaj Baber MBA-I 23
  24. 24. THANK YOU Ruturaj Baber MBA-I 24

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