The document discusses different economic systems including communism, socialism, and capitalism. Under communism, property is collectively owned by the state. The Soviet Union established communism under Lenin, and Stalin rapidly industrialized the economy. However, central planning proved very difficult and led to inefficiencies. Gorbachev later introduced reforms in Russia called perestroika due to the failure of the communist system. Countries transitioning to capitalism face challenges like privatization and adjusting to new market incentives. Japan has a capitalist system but is dependent on trade due to few resources, and known for loyal workers despite long hours. The "Asian Tigers" refer to rapidly growing Asian economies of Hong Kong, Singapore, Taiwan, and South Korea.

1. 1. From right to left, what three economic systems appear on
the Spectrum of Economic Systems?
a. Capitalism
b. Socialism
c. Communism
2. Who owns the means of production under capitalism?
Private individuals/businesses
3. What are three advantages of capitalism?
a. Efficiency
b. Individual Freedom – to either produce or buy whatever individuals want
c. Flexibility – to accommodate changes in consumer preferences or prices
of resources
Chapter 19, Section 1

2. 4. What are the disadvantages of (pure) capitalism?
a. Public goods such as roads, public schools, a system of justice etc. are
ignored
b. Poor people, unemployed, and less productive members of society
would be ignored
c. Can be unstable (e.g., Great Depression) life can be incredibly tough
without safety nets such as Social Security, unemployment tax, etc.
5. Who owns many basic productive resources under
socialism?
The government

3. 6. What are two advantages of socialism?
a. People that are less fortunate and less product still share in the benefits
of society
b. Universal benefits such as free education, health care, welfare,
guaranteed jobs in government industries
7. What are two disadvantages of socialism?
a. Less efficient, e.g., if certain jobs are guaranteed, more workers might be
hired than necessary
b. Special interests gain more power (e.g., ruling class has more influence to
control government policies)

4. 8. Who owns property under theoretical communism?
Property is collectively owned (no such thing as private property)
9. What are two advantages of communism?
a. Worker security – the state directs workers into their jobs and they
cannot be fired or dismissed
b. Free health care, education, and military defense system
10. What are four disadvantages of communism?
a. Loss of individual freedom
b. Inefficiency of centralized
planning
c. Low productivity and
shoddy products
d. Can’t move jobs, same pay
regardless of how hard you
work

5. Chapter 19, Section 2
1. Who set up a communist government in Russia?
Vladimir Lenin in 1917
2. Which dictator of the Soviet Union oversaw the rapid
industrialization and collectivization?
Josef Stalin
3. Why was central economic planning in the Soviet Union so
difficult?
Centralized planning meant the government had to figure out and plan for
the amount of goods and services needed in every single industry. This is
insanely difficult if not impossible. It did not help that planners were often
political appointees with no understanding of the industry they planned for.

6. 4. How did production quotas and the lack of effective
incentives contribute to the collapse of the Soviet economy?
Lack of effective incentives resulted in workers being extremely less
productive and production quotas resulted in some of the poorest-quality
consumer goods in the world
(e.g., shoe quotas example)
5. a. Which Soviet leader introduced perestroika?
Mikhail Gorbachev
b. What motivated him to do so?
The economy had become too complex for central planning

7. Chapter 19, Section 3
1. What are four major problems faced by a country making
the transition to capitalism?
a. Privatization – changing from government-owned to individual-owned
companies
b. Loss of Political Power – e.g., Communist party was ruling class under
communism, power spread to more groups/individuals
c. Discipline of Capitalism – likely to encounter disadvantages of capitalism
far before advantages
d. Responding to New Incentives – individuals must now take own initiative
and make own economic decisions rather than being told where to work

8. 2. What are two ways in which privatization has been
accomplished?
a. Vouchers – Used in Poland and Hungary – either given or sold at low
prices, then used to purchase shares of the company being privatized
b. State-owned companies sold to foreign corporations
3. Why are countries in transition likely to experience the
instabilities of capitalism before they experience the benefits
of capitalism?
These countries have not had enough time to establish social safety nets
such as Social Security and unemployment, which can mean a very tough
life for some people

9. Chapter 19, Section 4
2. What word describes most Japanese workers’ attitudes
toward their employers?
Loyal – worker loyalty is incredibly high, employees often start work very
early and stay very late every day (12 hour days are not unusual)
4. Why is Japan so dependent on international trade?
Very few natural resources on the island; however, Japan has a policy of
protectionism that makes selling foreign products in Japan extremely
difficult
5. What four countries are called the “Asian Tigers”
Hong Kong, Singapore, Taiwan, South Korea

10. Communism (Command economy)
Philosophy of Communism written by:
Advantages:
Property is owned by:
Established in Russia via the Russian Revolution by ________________ in (year) ________
Rapid industrialization and collectivization of economy oversaw by ________________
Russia’s movement away from communism was started by ______________ with a policy
called ____________, which reduced the government authority over the economy, because
___________________________________________________________________________,
which is also one reason why the Soviet economy collapsed.
Piecework
Black Market
Socialism
Basic productive resources are owned by the ____________ while remaining resources are
owned and operated ___________
Advantages/Benefits:
Capitalism (Market economy)
{ESSAY} Define and know two advantages/disadvantages
Privatization
Voucher system
Problems faced by a country transitioning to capitalism
Japan
Protectionism
Worker loyalty
Asian Tigers