rotes: Comparing Economic Systems

NOTE: While we will discuss each system in detaB together, it is always helpful to read Chapter 2 in your textbook to rgnderstand them in more depth!

ihe Background:

Some basic terms to understand: Sodety: Government: Resources: Allocate:

Some basic questions: 1.

3. Which then leads to some practical questions: 1. 2. 3.

The Solution: Societies must then develop to answer those questions. S0000-an "economic system" is:

try

canN'
Mr. Johnson h t i o : / / m r - l o h n s o n . u s

Three B a s i c Economic Systems

Mr. Johnson

http://mr-iohnson.us

Communism, C a p i t a l i s m and Democracyr i n China

Prom Constitutional Rights Foundation's "Rill of Rights in Action" Spring, 2008

DIRECTIONS: After reading and outlining the article, answer these. Complete answers are required! Complete sentences are NOT required.
The amount of space provided is NOT an indication of how long your answers should be... They could be shorter or longer :-)

Mao zedung and Conununism

1. How did Mao re-allocate (re-distribute) farm resources? (land)

2. How did Mao re-allocate industrial resources? (capital)

3. How did Mao re-allocate human resources? (labor)

4. According to the article, why didn't MaoIs programs work?

Deng Xiaoping and Capitalism

1. In the 2 years between the death of Mao and the appointment of Deng what informal changes began to happen in China's economy?

2. Why?

qt 3. Describe some of the changes in the level of government control over the economy that took place under Deng's leadership.

Smile (FmN
t e s M r . Johnson
9/26/13

page 1

Results of Capitalist Reforms

1. 2. 3. 1. 2. 3.

China and Democracy

1. Label the scale below with an "E" for where you think China belongs in terms of how much the government controls the economy. 2. Label it with a "P" for where China belongs in terms of how much the government controls the people.

North Korea
Complete Control

e l

United States
y little control

Explain your reasoning WITH evidence from the article.

Sm
Mr. Johnson 9/26/13

page 2

_. .

r;v , BEL aRums INACTION

6 (
, SPRING' 2008

CONSTITUTIONAL

R I G H T S F O U N D AT I O N

Communism, Capitalism, and Democracy in China

In recent decades, China's Communist Party has increasingly adopted capitalist models for its economy, and its economy has boomed. Will the surprising success of capitalism in China eventually lead to democracy? F ollowing War 1, China entered a long period ofWorld civil war. Fighting on one side were the communists. Led by Mao Zedong, they supported adapting the economic ideas of Karl Marx to China's mainly rural peasant society. On the other side were the nationalists led by Chiang Kaishek He favored a capitalist economic system. When the Japanese invaded China in World Warn, Modern high-rise buildings dot the skyline of the Pudong district in Shanghai, Mao and Chiang agreed to an uneasy truce. China'sfinancial center ('iStockphoto.com/DavidPedre) (Mao and Chiang are family names. Unlike Western names, Chinese family names Mao wanted to eliminate capitalism and its emphasis on come before given names.) property rights, profits, and free-market competition. He After the defeat of Japan, the Chinese civil war followed the ideas of Karl Marx, who envisioned a comresumed. Mao's experienced peasant fighters final- munist society where all would equally share in prosperity. ly defeated the nationalist forces under Chiang, Most Chinese were peasants, poor farmers who worked on who fled with them to the large island of Taiwan. land owned by wealthy landlords. Mao confiscated these On October 1, 1949, Mao declared victory for the (Continued on next page) Communist Revolution and proclaimed the People's Republic of China. Mao Zedong and Communism Mao Zedong concentrated all political power in the Chinese Communist Party. He set up a regime similar to that established by Vladimir Lenin in the Soviet Union, following the Russian Communist Revolution. Under Mao, China's Communist Party ruled as a "democratic dictatorship" in the name of the workers, peasants, and small merchants. Communist Party leaders decided China's laws and policies. They also chose government officials and nominated those who ran unopposed for seats in China's legislature, the National People's Congress.

Reform

This edition of Bill of Rights in Aclion looks at issues related to reform the first article examines modern China and questions whether its reform of its economy. will lead to democratic reforms. The second article looks at Uptown Sinclair's groundbreaking work The Jungle and its impact on the meat-packing industry at the beginning of the 20th century The last article explores the pragmatic philosophy of John Dewey and looks at his attempts to reform education and American democracy World History: Communism, Capitalism, and Democracy in China U.S. History: Upton Sinclair's The Jungle Government : John Dewey and the Reconstruction of American Democracy -

0 2043, Constitutional Rights Fowidation, Las Angeles. All Connitutional Rights Foundation materials and publications, including Bill of Rights in Acticn, ate protected by copyright Howevet we hereby grant to all recipients a license to reproduce all matericd contained herein for distribution to students. other school site personnel. and district administrators. (ISSN: 1534-9799)

lands and executed thousands of landlords who resisted. During the 1950s, Mao formed "collective farms," each worked by over 100 families. The income of the families was in theory equal. But since the peasants worked for the collective rather than on their own farms, there was little incentive to work hard. Farm production fell under this system.

Five years later, Mao decided that too many were betraying the Communist Revolution by leading China back down the road to cair talism. He launched the Culturai Revolution. This mass movement attacked anyone who failed to support Mao's ideas about creating an ideal communist society.

Mao unleashed millions of young people, called Red Guards, to Deng laaoping (1904-1997), who led China from In the cities, Mao began to put fac- 1978 until his death, adopted capitalist methods to enforce communist revolutionary tories and other businesses under reform China's economy. (Raimedia Commons) purity. Carrying the Little Red Book of Mao's sayings, they zealstate (government) ownership. ously denounced anyone suspected The state set production goals, of "capitalist leanings." (Red is the traditional color of wages, and prices. Most city workers became employees of these state-owned enterprises. The state guaran- revolutionary communism.) teed workers a job along with benefits like health care For nearly 10 years, a reign of terror gripped China. The for life. Chinese workers called this the "iron rice Red Guards assaulted, tortured, persecuted, and forced bowl." But again workers had little incentive to be effimillions from their jobs. With so many people's lives cient, productive, or even care about the amount or disrupted, the economy suffered severe declines in food quality of their work. Consequently, industrial produc and industrial production. tion declined. The Cultural Revolution ended when Mao died in 1976. By the late 1950s, Mao had banned free markets in rural China's economy was again in crisis. But even more China, where peasants used to sell farm products from troubling to Mao's successors, many Chinese had lc' little household plots. In the cities, the state owned and faith in the Communist Party. operated most factories and other businesses. Only a Deng Xiaoping and Capitalism few remnants of private enterprise, what communists called the "rattail of capitalism," still existed in China. The death of Mao set off a power struggle within the Dissatisfied with the progress of the economy toward a Communist Party. Reformers wanted to change the party. Hardliners sought to continue on Mao's path to comfully Marxist system, Mao turned to a more intensive approach he called the Great Leap Forward. In 1958, Mao munism. While this struggle in Beijing was going on, abolished household farm plots and reorganized collec- however, people in many parts of the country were taktive farms into "communes," each with about 5,000 fami- ing matters into their own hands. lies. The government sent young people from the cities to Even before Mao died, peasants were abandoning colthe communes to learn farm skills The communes not lective farming and producing food on their own to sell only operated huge farms but also factories, trade netat rural free markets. Throughout China, many became works, banks, schools, and militias. People lived in dormi- peddlers, bike repairers, shoemakers, and other private tories and ate meals in common mess halls. entrepreneurs, working for a profit. Private moneylenders offered loans to these budding capitalists to finance The Great Leap Forward ended in disaster in 1961. Crop and industrial production plummeted and a famine 'their businesses. Wherever private enterprises emerged, they seemed to flourish. resulted, causing millions of deaths. (Estimates of the number of deaths have ranged from 2 million to 50 million.) Finally, the worsening situation forced the government to reduce the -size-of the communes, restore family farm plots, and put into place work bonuses and other incentives. None of this activity was legal. But local officials usually ignored the lawbreakers. The Beijing government judged local officials on how well they ran their towns and cities. These officials discovered that privat( owned businesses reduced unemployment, cut pric?s,

Bill flights ihAction (24:1) 10011 Constitutional Itiahts Foundation

provided better consumer goods and services, increased In another radical break with the past, Deng created tax revenues, and tamped down social unrest. Special Economic Zones. Located in the east-coast -.Thus, local officials were motivated, with an occasional provinces of China, these zones attracted foreign investment by offering low-cost labor and tax breaks. Jribe thrown in, to bend or even break government regForeigners invested in manufacturing exports such as ulations and laws. Sometimes they even registered a clothing, shoes, and toys. The economic boom drew private enterprise as a collective or state-owned busihuge numbers of migrant workers from all parts of ness. Thus, a private entrepreneur seemingly (but not China, seeking jobs and higher wages. literally) wore a "red hat." There were an estimated When Deng Xiaoping died in 1997, Jiang Zemin replaced him and continued Deng's capitalist reforms. He introduced amendments to China's Constitution that The success of this grass-roots capitalism persuaded reform-minded leaders, anxious to restore confidence in declared private enterprise a "major component" of the the Communist Party, to adopt capitalist methods to stimu- "socialist market economy." Under Jiang, t h e Communist Party also began to recruit Chinese capitallate economic growth. Deng Xiaoping, a veteran ists as members. Communist Party leader, headed this economic reform effort after he emerged as the main leader of China in 1978. By 2006, private enterprises accounted for half of China's economic output (Gross Domestic Product or (3DP) and Deng broke up the communes and permitted families to two-thirds of industrial production. Private enterprises, lease, but not own, farmland. The families had to sell a owned by Chinese and foreign capitalists, continue to mulset amount of their farm production to the state at a tiply and fuel China's rapid GDP growth rate, which more fixed price. The rest they could sell on the free market than doubled the U.S.'s growth rate in 2007. for whatever price they could get. In addition, rural China is struggling, however, with many economic industries, owned collectively by a village, sold their growth pains. The greatest improvements in Chinese rIR'\ roducts on the free market as well. income and standard of living have occurred mainly in Deng's reforms also legalized private enterprises owned the eastern coastal provinces and cities where Deng by individuals, partners, and shareholders. Stock marXiaoping established the Special Economic Zones. In kets opened. Deng scaled back the government's setting the rural western provinces, millions lost their lifetime of prices and wages in favor of supply and demand on jobs because of the breakup of the communes, the lack the free market. Because of all these reforms in the of investment in these provinces, and the closing down 1980s, the "red hats" began to come off, and increasing of some state-owned enterprises. Masses of workers numbers of Chinese became "red capitalists." have migrated to eastern cities. Deng faced big problems in reforming the state owned enterprises (SOEs). These were industries and other businesses owned and operated by the government. They ranged from small silk factories to huge steel mills. The reform of SOEs went much slower than in other parts of the., economy. Early reforms gave more independence to managers over wages, prices, and production methods. But the SOEs had to compete with private enterprises. Outside the booming city Shenzhen near Hong Kong, foreign and Chinese investors built hundreds of flimsy "three-in-one" factories, containing assembly lines, warehouses, and worker dormitories. Accidents and fires are frequent. Competition among these businesses is fierce, often causing managers to cut costs by any means, even cheating workers out of overtime pay and disregarding worker and consumer safety. half-million "red hat" capitalists, including even Communist Party officials, operating private enterprises in China by the mid-1980s. Results of Capitalist Reforms

Despite government anti-corruption campaigns, factory owners often bribe local government officials and police Supposedly, if an SOE could not make a profit, it would to ignore building, labor, and pollution-law violations. have to go out of business. But this would mean mass "Here it is not the government but the bosses who control or14,ayoffs and ending the "iron rice bowl." While private _ Atrepreneurs and worker shareholders bought out some everything," remarked one female worker. SOEs, the government still keeps many of them operatFamilies work most farms today and sell what they proing even though they continue to lose money. duce on the free market. But they still cannot own the
(Continued on next page)
Bill of Righu lit Action (24: I ) 02008, Constitutional Rights Foundation

land they farm. Farmer protests have gotten increasingly violent over real estate and other developers bribing local officials to force farmers off the land for more profitable enterprises. Clearly, China has become a more prosperous nation by unleashing private enterprises that are more efficient and productive than state-run businesses and farms. But the new economic wealth is uneven among the Chinese people. Private entrepreneurs, investors, city workers, and the families of Communist Party officials have benefitted the most from the emerging capitalist economy. An estimated 1 percent of Chinese households control over 60 percent of China's wealth. Some wonder if Marxism with its goal of economic equality is finished in China. China and Democracy Some democratic reforms have taken place in China since the death of Mao Zedong in 1976, but the Chinese Communist Party still holds a monopoly on political power. Decisions are made by a few elite leaders chosen from the Communist Party.

The Chinese have wide access to newspapers, TV, and even talk radio. But certain topics are off limits One dissenter was arrested recently for "endangering the state" when he tried to organize a "We Want Human Not the Olympics" petition. The government censor,. books, videos, and newspapers. It also blocks Internet sites and closes down blogs and chat rooms if they discuss topics such as "democracy" and "famine in China." Public demonstrations, some of them violent, have been increasing in recent years. Unemployed factory workers, farmers pushed off the land, and people fed up with corrupt officials have taken to the streets since they have few other ways to voice their grievances to the government. Particularly disturbing to the government have been riots and uprisings by ethnic gimps seeking independence. In the months leading up to the 2008 Summer Olympics in Beijing, the government harshly suppressed protests in Tibet, which China annexed by military force in 1951.

China today may be trying to define democracy on its own terms: "democracy with Chinese characteristics," Even so, significant political reforms lave occurred at in the words of an official document. For example, the the local levels of government. Election reform laws Communist Party stresses group rights like health car now require the number of people running for local govover Western-style individual rights such as freedon, ernment councils to exceed the number of seats availof speech. able. In addition, over 50 percent of the voters must vote for a candidate for him or her to win a seat Political cam- China's current top leader, Hu .lintao, has spoken about paigning, primary elections, and absentee ballots are "greater participation" by the people. But party leaders becoming more common. The Communist Party has have not given much serious discussion to expanding apparently introduced these local democratic election local competitive elections to China's provinces, let reforms mainly to improve its trust among the people, alone to the national level. "They want democracy to eliminate corrupt local officials, and deter social unrest. belong to the party, not to belong to the people," said an anonymous retired party official. People have more freedom today to discuss public matters openly and even criticize the government, but Will the surprising development of capitalism in China lead to democracy? Political scientists had long only up to a point. The government comes down hard on individuals and groups that even appear to threaten assumed that as capitalism improved the wealth of a Communist Party rule or social stability. society, an expanding middle class would demand m. democratic rights. But some scholars have recently The army opened fire on pro-democracy demonstrachallenged this assumption as nations like Russia and tions in TiEmanmen Square in 1989. Since that time, China have adopted capitalism without democracy. the government has acted quickly to smother attempts A number of recent surveys indicate that after 30 years of to establish independent student organizations and capitalist reforms in China, private entrepreneurs are labor unio Lnt Chinaihas evenoutlawed the Falun l i b m o i Gong, a seemingly harmless group that conducts phys- much more interested in running their enterprises and making money than demanding democracy. As long ical exercises based on Buddhist spiritual practices. the Communist Party continues the program of free marThe government calls the group a cult that threatens ket reforms and keeps the country stable, China's new public order.

Bill ofitights in Action (24:1) 2011R. Constitutional Rights Foundation

Major Characteristics of Communist and Democratic Systems Communist Democratic

., ' 1. Marxist Economy Capitalist Economy

Farms, industries, and other enterprises owned in common by the people and operated by the government, Government economic plans set production goals, wages, and prices. Goods and services to be shared equally by all.
Leninist Government

Farms, industries, and other enterprises mainly owned and operated by private entrepreneurs and shareholders seeking profits. Production, wages, and prices set by free market supply and demand. Goods and services distributed according to one's ability to pay.
Democratic Government

2. 3.

I.

Communist Party alone rules as a "democratic dictatorship." Only those chosen by the party run unopposed in elections for government offices. Persons in power dictate laws and how courts will rule. No guarantee of civil or political rights; dissent against the party and government suppressed.

Multiple political parties compete in fair elections to rule. Competitive elections for offices at all levels of government. Elected leaders must obey the laws and court decisions ("rule of law"). Individuals guaranteed civil and political rights, including dissent against the government.

2. 3. 4.

capitalist middle class seems to be content to go along rwth' vith the current regime, at least for now. As new economic opportunities arise, more Chinese may finally begin to enjoy the prosperity that Mao Zedong could never achieve. Some experts estimate that by 2025 China will have the world's largest middle class. A wealthier and more confident China may yet evolve to become a democracy.

A C T I V I

For Discussion and Writing 1. Why do you think Mao Zedong failed to achieve his Marxist communist goals of economic equality and prosperity? 2. Why did Deng Xiaoping launch a program of capitalist reforms? 3. D o you think China will ever become a democracy? Why or why not For Further Reading Denoon, David B. H., ed. China, Contemporary Political, Economic, and International Affairs. New York: New York 1 pniveisity Press,2007. ../.0 Kellee S. Capitalism without Democracy, The Private Sector in Contemporary China. Ithaca, N.Y.: Cornell University Press, 2007.
Bill ofilights tu Action (24:1) 02008, Constitutional Rights Foundation

Capitalism and Democracy in China Students in small groups should first review the chart titled "Major Characteristics o f Communist and Democratic Systems." The students should use these characteristics and the information from the article to discuss where to place today's China on the two scales below. Each group should then list evidence to defend its placement of China on the two scales. Marxist 0 1 2 3 4 5 6 7 8 9 10 Capitalist Economy Economy Leninist 0 1 2 3 4 5 6 7 8 9 10 Democratic Government G o v e r n m e n t

w w w - : cr , f-u o r g Liz- : s a -

iohnson jpsonEne.org

httPlimr-johnson.us

D LECXDOELIE MITEIC%51 Iw
Communism: Socialism: Authoritarian: Karl Marx: Philosophy of Communism...

000 Chapter 2, Section 2

Why do communism and extreme government control go together so well?

How are the goals of socialism met by allowing both government ownership/control and Ovate ownership/control of resources?

How would you describe the relationship between the government and the economy in China today?

Smile
Mr. Johnson

,15's

9/25/13

page 1

Name:

r r : 1 ; '.i r Pt aS t i f i 30

17.: V r v e 4 t ,

'

Markets E) Prices
right to a n d i t . Profit would be . _ - - - - - - without the right to own property. ('Property",:ilere_means both tangible and land.) A gives'you the Buyers and sellers freely goods and services on the The matte forces of and determine what _ will be.

Incentives/Self -Interest
People's owft PI motivates theftt to produce, in the hope of making S e l f - interest is
' a l s o a n i n c e n t i v e f o r 1 0 1 1 . = .

People are free to _ - _ what to a n d what to - The choices producers and consumers make determines what a n d are available..

who seek to fulfilt their a n d at the best price possible.

Producers w other for b

7;\ most t

i t h each y trying to
o consunlerS.

' The d o e s '-, rules about a n d

not make

produce goods and services that will be 1 This leads to innovation and better

gets produced. The government's main role is to make sure the market is and producers have a chance to

qa-BINI ICS

Note-taking Worksheet

The Market Economy

The Economy

Name:

You've probably heard people say things like, "The economy is down," or, "Such-and-such would be good for the economy." Maybe you've figured out that the economy has something to do with money. But what is this big, scary "economy" everyone's always worried about? And how can you avoid it? That was a trick question. You can't avoid the economy! An economy is the way goods and services are produced and consumed. Everyone is involved in the economy both by producing goods or services and by consuming them. There are different kinds of economies, and the kind of economy a country has determines how resources get distributed to the people.
Goods & Services

Consumers, Producers, and the Market

Have you ever bought anything or paid someone to do something for you? Then you are a consumersomeone who acquires goods and services for his or her own personal use. Have you ever worked babysitting, walking dogs, or making fast-food tacos? Men you are a producer, too someone who makes goods or offers services to others. In a market economy, producers are free to decide what to produce, and consumers are free to buy whatever they need and want. Unlike some economies, the government does not tell producers what to make or limit (for the most part) what consumers may buy. This selling and buying takes place in the market, which is not a physical place, but instead refers to the entire activity of buying and selling that takes place out in the world.

Are You Motivated Yet?

So, why would anyone decide to produce and sell something? You guessed itmoney! Profit is the financial gain received by selling something for more than it cost to make it. Producers are motivated by the profits they expect to gain from the goods or services they offer. Their incentive to producethe thing that motivates themis the idea that consumers will want or need what they are offering. Thus, someone who thinks people want phones that respond to voice commands has an incentive to produce such phones because they expect they will profit from selling them to lots of consumers. But what about when two or more producers are offering the same goods or services? This results in competitionproducers battling over who can make the most profit. Competition is a big motivator. Here's what can happen: Better Stuff. Competition leads to innovation, which is the process of developing newer, better things. Think of 'Phones, Android phones, and Windows phones: The producers constantly come out with new versions that have newer, better capabilities. Why? Because each producer wants you to spend your money on its phone instead of the other guys' phones. Good Deals. Competition drives prices down. For a while, iPad was basically the only tablet on the market. Apple didn't have to worry about people buying other f tablets because there weren't any real choices. Butto when other tablets came to on the market at prices lower than iPad, Apple began lower its price in order compete. But deals have limits: Producers have no incentive to offer something for less money than it cost to make it. Reading p1

The Market Economy

Name:

A. Review. Read each scenario. Match each label with the example that illustrates it.

1) Marla goes to the store and buys a new backpack. 2) Tyler mows lawns and does yard work for $10 per hour. 3) Gas Station A sells gas for SIM/gallon. Across the street, Gas Station B sells it for $3.74. Gas Station A lowers its price
to $3.74. 4) Liam spends $1.0 on lemonade mix and ice. On a hot day, he sets up a lemonade stand in his yard. At the end of the day, he has

sold $20 worth of lemonade.

5) A car company made thousands and thousands of cars this year, but people haven't been buying as many cars. The car dealer lots are full. 6) Erin could make $24 this afternoon babysitting, or she could attend her grandma's birthday party. She decides to attend the party. She doesn't get the money, but her grandma is thrilled. 7) It's holiday time, and the hottest toy of the year sells out. People are paying ten times what it's worth online.
B. Motivated? For each example, circle ca) if the person or business has an incentive to act and circle e if they don't. 1. Jason is thinking of getting some raspberries, but they're out of season and cost $6 for a tiny box. qI 2. Acme, Inc. is thinking of making touch-screen computers. It can make computers for $500 each and sell them for $2,000 each.
4?

C. A Circular Flow. Mere is a circular flow of interaction between consumers and producers in the market. Draw an arrow at one end of each line in the circle to show which way the thing described on that line is flowing.

3. Beta, Inc. is thinking of making cars that run on water. It will cost $100,000 to make one car, but people won't pay more than $40,000 to buy one. 4. Ann's house needs a new roof. She is thinking of doing the project this weekend, and roof shingles Just went on sale for half price. 5. Dr. Smith is thinking of opening a dentist office in Centerville. Right now the nearest dentist is in the next town, 40 miles away. ire ceo

IVICS

Worksheet p.1

The Market Economy

Name:

D. What's the Opportunity Cost? For each situation, write the opportunity costwhat the person gave up by making the decision. (Hint: Don't worry about math. Describe the cost in words.) 1) Clink or swim? Sam's boss called to offer her an extra shift tonight. Sam wanted the money, but she's got a big swim meet tomorrow and 'laded sleep. She told her boss to offer the shift to someone else. 2) An Interest- ing Choice 3) Risky Business 4) An airy hard decision

I f Zephyr, Inc. spends $2 ' Lacey designs dresses. She million buying out its main It Jason can put his money in a savings account and earn , can keep designing casual competitor, it can earn $3 1 about 12 cents in interest ; dresses that bring $65 but , million in new sales. If it this month, or he can loan it are easy to sell, or she could $2 million designing a to Matt, who says he'll design formal gowns that sell isperlds new airship, it might make $4 for $500 but must be high t return the money plus $ million if It can sell 10 ships. 1 at the end of the month. He fashion. She. takes a risk on It buys the competitor. loans it to Matt. formal gowns. The opportunity cost was: ), The opportunity cost is: The opportunity cost is: I! The opportunitycost

i
' . ; , 4 4 . ; r 4 ; 4 , ; . : , 4 . . F . " 7 , . . . W 1 4 .

E. Three Kinds of Economies. You already know about market and command economies. A traditional economy exists in primitive cultures where most activity is focused on providing food. People follow the methods and traditions their ancestors have always used. Think about this, and read the statements below. Organize them into the comparison chart by writing the letter of each statement where it should go.
,
-z , s y d r a t r e

- ' ' 4 -,P T onr,7

'

A. The government decides what should be produced. gather, or farm. C. Producers don't compete because everyone works to meet the community's survival needs.
D. The government sets wages, so people aren't motivated by profit. E. Producers compete with each other to make profits from customers. F. The government owns the property. B. The need to survive motivates people to hunt,

G. Producers decide what to make based on consumer

demand.

H. Private individuals own the property. 1. The community's customs and traditions determine

what is produced.
J. Most property is shared by the community. K. The hope of profit motivates producers to develop new things. L. There is no competition because the government is uc the only producer. Worksheet p.2

flohnsoralpsonline.org

...when the government gets Involved with market systems

Re t i e av@va315.0.

REVIEW: A d a m Smith...
di " " rather than " motivates

people to produce. Producers are guided by an m k w o e a s s e t p e t . f r o m b working properly. e involved with markets! t o produce what

money, so they

Reality Check: The i c c d o a n a n e n s not always make the right act to prevent Industrythrough also a n industry or business a n d promote

to (hopellilly) benefit

Changing Ownership:

When the government of a country

When a private business

Mr. Johnson

10/6/13

page 1

ijohnsontPlpsonane.org

http://mr-lohnson.us

L i t r i 11 9

"

cm'

1 A

Smile
Mr. Johnson 10/6/13 page 2