Capitalism Under capitalism

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Under capitalism, individual people can own and control land, capital (money), and production of industry.  Individuals are free to purchase and own their own homes, cars, furniture, and other goods such as TV, radios, computers, boats, or anything else they might want. People have total freedom to live where they want and to choose the type of job they want to pursue.  If someone has an idea for a new business or invention, he/she is free to pursue this without government interference.  Under this system people have the maximum number of choices in life.  This is what is meant by the “pursuit of happiness” from the Declaration of Independence

Free Market
Another name for capitalism is the free-market system. The "free" in free-market system means that the market is free to work itself out without government interference. Businesses can decide what products to make and how much to sell them for. People can decide what products to buy and how much they want to pay.

Adam Smith
The idea of the free-market system was first introduced by Scottish economist Adam Smith in 1776. He wrote a book called The Wealth of Nations that described how a free-market economy would work. He said that government should stay out of the economy and let pure competition determine pricing and products.

Pros of Capitalism

  • Efficiency - Capitalism forces companies to compete for business. This competition makes companies be more efficient.

  • Freedom - People and companies are free to do what they want in a capitalist economy. Governments in a capitalist economy have less control and less power. This leads to greater political freedom.

  • Innovation - In a capitalist economy, people and companies are rewarded for innovation. This leads to greater technological advances.

  • Economic Growth - Capitalism leads to economic growth and a higher standard of living.


Communism’s stated goal is to form a society where everything is shared equally. Under communism, individual people cannot own land, capital (money) or industry. Under communism, the government controls these things and has total control of everything produced, what is made, and who will receive the goods and services produced.   Individual people are not allowed to own their homes, cars, furniture, or even the food they eat.  The government decides what people can use and where people will work.  Under communism, people have few if any rights.  

History of Communism
Karl Marx is considered the Father of Communism. Marx was a German philosopher and economist who wrote about his ideas in a book called the Communist Manifesto in 1848. His communist theories have also become known as Marxism. These are some important aspects of a communist government:

  • There is no private property. All property would be confiscated (taken) by the government

  • The government owns and controls all communication and transportation

  • The government owns and controls all education

  • The government owns and control factories and agriculture

  • The government tightly controls labor

  • Farming and regional planning would be run by the government

Communism in Russia
Communism began in Russia with the rise of the Bolshevik Party led by Vladimir Lenin. They led the 1917 October Revolution and took power. Lenin was a follower of Marxist philosophies. His views on government became known as Marxism-Leninism.

Russia became known as the Soviet Union. In World War II Russia, under Joseph Stalin, sided with the Allied Powers in order to help defeat Germany. However, after the war the Soviet Union took control of several countries in Eastern Europe. They became known as the Eastern Bloc. The Soviet Union became one of the world's two superpowers along with the United States. For many years they fought the west in what is today called the Cold War.

Write out the following questions and answer them im complete sentences.

  1. Who was the man generally credited with the introduction of capitalism?

  2. What was the name of the book this man (in questions 1) wrote?

  3. Who is considered the Father of Communism?

  4. What was the name of the book this man (in questions 3) wrote?

  5. What is the positiion of communism on each of the following topics? (Remember, each of thwese had to be addressed in a complete sentence.

  1. Private property

  2. Freedom of the press

  3. Transportation

  4. Education

  5. Factories

  6. Labor

  1. Who was the leader of the Bolshevik Revolution who brought communism to Russia?

  2. What was the name of Russia during the time it was run my communists?

  3. Which system leads to more political freedom? Why is this?

  4. Cite five freedoms that people who live under capitalism have. Write a sentence about each one describing it.

  5. Write a sentence about each of the “pros” of capitalism, stating what it was and why it was important.

  6. Why is the market under capitalism called the “free market”?

  7. How does private property ownership differ from capitalism to communism? (Make sure you explain what the attitude towards private property is in each system, and then explain the difference.)

  8. What was the Eastern Bloc?

  9. What is the name given to the non-fighting war between the west and the Soviet Union to prevent the spread of communism?

  10. What do you consider the most significant difference between capitalism and communism? Write 3-4 sentences explaining why you picked this and what the difference is.

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