Wouldn't it be great if money grew on trees?
Everyone could buy what they need. There would never be conflict.
Sadly, that's just not reality.
In a world with limited resources, societies have developed beliefs like communism and capitalism that structure how the economy should be run.
What is communism?
Communism is an economic ideology by Karl Marx in which all property is publicly owned and people are paid according to their economic needs.
In a communist society:
the means of production (like land, resources, and factories) are publicly owned
wealth is shared according to need
the needs of society are more important than individual freedom
everyone is equal, and there is no government or private property
What is capitalism?
Capitalism is an economic ideology in which property is privately owned and trade is controlled by competition.
In a capitalist society:
the means of production are privately owned
the economy is driven by supply and demand
individual freedom is more important than society's needs as a whole
class distinctions categorize people by their economic position in society
Pros and cons of communism and capitalism
everyone's basic needs are met
no class divisions
equal access to jobs, healthcare, and other social services
lack of economic growth due to lack of competition
less personal autonomy and freedom
potential for corruption
economic innovation is incentivized
unrestricted economic and political freedom
higher standard of living
inequality of opportunity and outcome
society is divided by class
less economic stability due to "boom and bust cycles"
Communism, capitalism, or both?
Capitalism and communism are both economic ideologies, or visions for how the economy should run. In reality, economies are a mix of policies that reflect elements of capitalism and communism.
A mixed economy may:
protect private property but allow the government to step in for the collective good
have some industries that are publicly owned because they're considered essential
Communism and capitalism today
North Korea, Laos, Cuba, China, and Vietnam are the only official communist governments, however none of them meet the true definition of communism.
Singapore, New Zealand, Australia, Switzerland, and Ireland are some of the most capitalist countries.
Capitalism is the most influential economic system worldwide.
Which of the following policies reflect a capitalist ideology? Select all that apply.
Welcome to Money Island!
The economy is based mostly on agriculture, manufacturing, and energy. The island is dotted with vineyards that have been passed down from generation to generation, and wine is their biggest export.
As part of its economic policy to promote growth and reduce unemployment, the government has shares in private corporations across a number of industries. The government has also set workers' minimum wage at $25 per hour.
Is this an example of communism, capitalism, or a mixed economy?