Democratic Capitalism Free Market Capitalism or Laissez-faire Capitalism• Private ownership of property• No legal limit on the accumulation of property• The free market – no government intervention in the economy• The profit motive as the driving force• Profit as the measure of efficiency
Adam Smith (1723-1790)• Intellectual father of capitalism• Human beings motivated by self-interest • Individuals should be free (free market) to pursue their interests (profit). • Results in the most efficient economic system • Everyone will benefit • Goods will be produced • Jobs will be created • Economy will be stimulated and grow
John Maynard Keynes(1883-1946)• Some government regulation necessary • The Great Depression• People should be protected from radical shifts in economic fortune
Mixed Economy• Government regulation in U.S. • Growth during the Johnson Administration • Decline since Reagan Administration
Capitalism and Democracy• Capitalists believe democracy requires capitalism • Freedom based on private property • Capitalism stresses private property• Capitalists believe that government regulation destroys individualism and liberty
Criticisms ofDemocratic Capitalism• Extremes of wealth and poverty • Capitalists view • Poverty the fault of the poor • Poverty overcome through economic growth• Political power of the wealthy• Inequality between employer and employee • Fosters undemocratic attitudes leading to authoritarianism in the employer and servility in the worker.
Democratic SocialismSocial Democracy• Much property held by the public through democratically elected government• Limit on the accumulation of private property• Governmental regulation of economy• Extensive publicly financed assistance and pension programs• Social costs and provision of services a measure of efficiency
Socialism• Origins traced back to biblical times• Citizens should have some say in economic decision-making• Only way to ensure solutions to basic social problems• Some degree of redistribution of income and limitation of private property.
Socialism and Democracy• Participation in political decision making should include economic decision making • Voters should be able to control their economic futures through the government they elect. • Government regulates the economy it does not own directly • Ensure that privately owned businesses operate in best interest of society• Liberty cannot be maintained without economic security
Criticisms ofDemocratic Socialism• Free market is essential for efficient production and distribution of goods• Government ownership and regulation puts too much power in the hands of government• Motivation • Capitalists believe humans motivated by self- interest • Socialists believe humans motivated by the desire to serve
Current Trends• The Third Way • The attempt to find a way between capitalism and socialism • Use whatever policy works!• Economic Democracy • Ownership of companies by workers • Workers actively involved in decision making that gives them significant authority
Conservatism and Liberalismwith Democracy1. General sets of attitudes toward change, human nature, and tradition2. Positions taken at different times and places by identifiable groups of people3. They have different histories in different countries
Democracy• Capitalists vs. Socialists• Conservatives vs. Liberals
Conservatism1. Resistance to change2. Reverence for tradition and distrust of human reason3. Rejection of use of government to improve the human condition4. Preference for individual freedom, but will limit freedom to maintain traditional values5. Distrust of human nature
Edmund Burke(1729-97)• Founder of modern conservatism• Social institutions slowly evolve over time to fit needs and conditions• Advocate of slow, gradual change
Liberalism1. A tendency to favor change2. Faith in human reason3. Willingness to use government to improve the human condition4. Preference for individual freedom5. Greater optimism about human nature than conservatives
Hubert Humphrey(1911-78)• “Liberals fully recognize that change is inevitable in the patterns of society and in the challenges which confront man.”• People should keep trying to improve society.• Change can be directed and controlled for human benefit.
ContemporaryConservatism• In the United States: • A belief in traditional values centered on the home, family and religion • A belief in capitalism, opposition to government regulation of economy, and support of a balanced budget • A belief in a strong military, opposition to communism and giving authority to international organizations
The New Right• Radical Right of the 1950s• Concerned with social issues centered primarily on the family, religion, and education • Abortion • Busing to integrate schools • Pornography • Prayer in schools • Local control of education• Does not believe in separation of church and state
ContemporaryLiberalism• In the United States • A belief in freedom of choice • Pro-choice position on abortion • Advocate rights for women and minorities • A belief in use of government intervention in the economy to regulate it • A belief in the need to work within the international community for peaceful resolution of conflicts
The Extreme• There are extremists on both ends of the political spectrum• Right wing extremism in U.S. • Oklahoma bombing • Militia movement• Left wing extremism in U.S. • Treehuggers • Greenpeace • Communist Party USA
Marxism• The political, economic, and social principles and policies advocated by Karl Marx
Marxism• A theory and practice of socialism including • The labor theory of value • Dialectical materialism • The class struggle • Dictatorship of the proletariat• Leading to the establishment of a classless society
Alienation• Being cut off• Human meaning of capitalism for Marx: • Labor sold like an object • What sold is part of a human being • No longer whole human being • Unable to establish full human relationships • People cut off from self, others, and work• The condition Marx wanted to change
The Economy• Economic relationships the foundation of social systems • Capitalism condemned by Marx • An essential stage in the development to socialism • The most progressive economic system developed so far
FundamentalFact of Life• People must produce goods before they can do anything else. • They must also reproduce themselves • But they can’t do that unless they are capable of feeding themselves• Thus, material production or economic relationships are basic to all life.
Marxian Economics• Labor theory of value• Doctrine of subsistence wages • Only paying workers enough to keep them alive• Theory of surplus value
3 hours toWorker given Produce good$30 worth of Using $10 material Worth of fuel Worker creates Product sold for $100
• Labor, and only the labor, increased the value of the materials to $100 • Worker entitled to $20/hour • If paid $15/hour, this is exploitation and is “surplus value” for the factory owner• According to Labor Theory of Value, all profits are the rightful earnings of the workers.• Marx called for • The elimination of profits • Workers to seize factories • The overthrow of the “tyranny” of capitalism
Class Struggle• Struggle between the • Bourgeoisie (capitalists) • Class that controls production but does little if any work • Reaps immense profits • Proletariat (workers) • Class that does the actual labor • Production requires the proletariat, not the bourgeoisie
Problem ofClassification• Peasantry • Landowners that do their own labor • Petite bourgeoisie? • Proletariat?• The dregs of society • Make no contribution to production • Lumpenproletariat• Revolution would solve the problem since it would lead to a one-class society
Revolution• Class struggle will ultimately produce a revolution • We must move beyond understanding society to changing it• Revolution both necessary and inevitable • Never happened • Colonial exploitation and imperialism
Types ofRevolution• Political Revolution • Political power seized by the proletariat • Usually violent • Change sudden • Bourgeoisie would never agree to its disappearance as a class• Social Revolution • Takes place later • First, changes are made in property relations • Second, the superstructure adjusts to the changes
Lenin• Developed the revolutionary party • Organized to overthrow capitalism • Proletarians too busy trying to stay alive • Party members would act on their behalf• Democratic Centralism • Discussion completely free within the organization until a decision is made • Once a decision is made, all must support the decision
Dictatorship of theProletariat• Brief transitional period • Period in which the superstructure would change to adjust to the socialist mode of production • Consolidation of the proletariat’s power • Gradual disappearance of the bourgeoisie and other minor classes• In reality, no country has moved beyond the dictatorship of the proletariat
FullCommunism• The goal of Marxism • No classes • The state withers away • No money • No religion • No crime • All work for the good of the society• The goal of the entire system, the utopia toward which all else is aimed.
One Nation, Underprivileged Rank 5: True to Values
The Judeo-Christian Ethic• The Old Testament: • The wealthy tend to close their “ear to the cry of the poor” • Wealth does not open the doors of heaven • Wealth can lead to the exploitation of the poor
Judgment• According to the Old Testament, individuals, communities, and rulers are judged on the basis of how well they treat the downtrodden.
Religions and Creeds• All major religions and creeds are practiced in the U.S.• Most Americans associate with Judeo- Christianity • Religious beliefs based on the Bible
Civic Principles• The founding principles and values that bind us together as a people • Liberty • Justice • Equality • Democracy
Liberty and Justice for All“It does not make any sense for a nation to proclaim itself a democracy if there is widespread and structural participatory disparity within the nation. A nation that strives for democracy must make a commitment to alleviate the plight of disadvantaged groups.” ~ Thomas Simon