3. 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
4. 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
5. John Maynard Keynes
(1883-1946)
• Some government regulation
necessary
• The Great Depression
• People should be protected from
radical shifts in economic fortune
6. Mixed Economy
• Government regulation in U.S.
• Growth during the Johnson
Administration
• Decline since Reagan
Administration
7. 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
8. Criticisms of
Democratic 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.
9. Democratic Socialism
Social 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
10. 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.
11. 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
12. Criticisms of
Democratic 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
13. 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
15. Conservatism and Liberalism
with Democracy
1. General sets of attitudes toward
change, human nature, and tradition
2. Positions taken at different times and
places by identifiable groups of people
3. They have different histories in
different countries
17. Conservatism
1. Resistance to change
2. Reverence for tradition and distrust of
human reason
3. Rejection of use of government to improve
the human condition
4. Preference for individual freedom, but will
limit freedom to maintain traditional values
5. Distrust of human nature
18. Edmund Burke
(1729-97)
• Founder of modern
conservatism
• Social institutions slowly
evolve over time to fit
needs and conditions
• Advocate of slow, gradual
change
19. Liberalism
1. A tendency to favor change
2. Faith in human reason
3. Willingness to use government to
improve the human condition
4. Preference for individual freedom
5. Greater optimism about human nature
than conservatives
20. 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.
21. Contemporary
Conservatism
• 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
22. 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
23. Contemporary
Liberalism
• 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
24. 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
27. 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
28. 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
29. 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
30. Fundamental
Fact 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.
31. Marxian
Economics
• Labor theory of value
• Doctrine of subsistence wages
• Only paying workers enough to keep
them alive
• Theory of surplus value
32. 3 hours to
Worker given
Produce good
$30 worth of
Using $10
material
Worth of fuel
Worker creates
Product sold for
$100
33. • 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
34. 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
35. Problem of
Classification
• 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
36. 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
37. Types of
Revolution
• 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
38. 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
39. Dictatorship of the
Proletariat
• 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
40. Full
Communism
• 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.
42. 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
43. Judgment
• According to the Old
Testament,
individuals,
communities, and
rulers are judged on
the basis of how
well they treat the
downtrodden.
44. 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
45. Civic Principles
• The founding
principles and values
that bind us together
as a people
• Liberty
• Justice
• Equality
• Democracy
46. 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
