ECONOMIC SYSTEMS AND THE INDUSTRIAL REVOLUTION

Opening Question

What is an economy? What comes to mind when you think of an “economy”?

Economic Changes

From feudal/land ownership to mercantile

A lot of resources = a lot of products Foreign trade

Economic Systems

Look to answer the questions… What to produce? Who will produce it? How it will be produced?

Include… Traditional (subsistence) Market Command

Traditional

Make food/supplies for themselves Little surplus Trade only if available Sometimes called subsistence farming

Poorer areas

Market

People freely choose what to buy and sell Natural resources are

abundant which means many products can be made

Many types of businesses England began to

transition to market economy during the

Industrial Revolution

Components of Market Economy (Adam Smith)

Free-enterprise: Competition of businesses to determine price McDonald’s dollar menu vs. BK’s value

menu Supply and Demand: factors that

determine price Demand goes up, price goes up…supply

goes up price goes down Capitalism: businesses privately owned

Command Economy

Government controls resources, production and prices Profit not necessarily important Look to provide for people

if bread costs $1 to make but no one can afford, they will charge $0.25

Components of Command Economy (Karl Marx)

Communism: economic and political system in which Communist party (government) controls production and resources Russian Revolution

Socialism: collective ownership of land and production (in theory)

Command Economies look to keepthe playing field relatively level