Chapter 2 : Lesson 3 The Global Transition to Capitalism

1. Chapter 2 : Lesson 3 The Global Transition to Capitalism

2. Essential Question: What are the common features of the transition to capitalism?

3. What is Capitalism? • Economic system. • Believes in individual ownership and competition. • The theory is that when everyone is selfish, it benefits everyone. • Adam Smith is “the” capitalist.

4. What’s good about capitalism? • Freedom, choice. • You can work wherever, buy whatever, and pretty much do whatever. • If you’re successful, you can be very successful. Think Bill Gates.

5. What’s bad about capitalism? • No “safety net.” • If you’re unsuccessful, you can be very unsuccessful. Think about the poor. • Big gap between rich and poor.

6. What is communism? • Economic system. • Believes in collective (group) ownership and a planned economy. • The theory is that everybody pools their resources and labor to evenly distribute everything. • Karl Marx is “the” communist.

7. What’s good about communism? • Security, basic needs met. • Everyone would have a job, house, health care, etc.

8. What’s bad about communism? • Lack of choice • No reward for being a better worker or punishment for being a slacker. • Everyone expected to be the same.

10. Karl Marx wrote about communism as solution to capitalism’s problems. • Marx said the workers would get fed up and overthrow their governments and start communism.

13. Three main reasons that countries transitioned Socialism to Capitalism 1. Inability for socialist economies to grow and modernize 2. Inability to compete in the global economy 3. Elites saw that their country was becoming less powerful as it was becoming less wealthy

14. Brain Drain

15. Privatization: conversion of state owned factories and other property to private ownership

16. Vouchers: certificates that could be used to purchase government – owned property during privatization

17. 5 Year Plan : Comprehensive, centralized economic plan used by the Soviet Union and China to coordinate development of agriculture and Industry

18. Gosplan : central planning authority in the former Soviet Union that devised and directed Five Year Plan

19. Collectivization : forced common ownership of factors of production; used in the former Soviet Union in Agriculture and manufacturing

20. Perestroika : fundamental restructuring of the soviet economy, policy introduced by Gorbachev

21. Great Leap Forward: China’s second Five Year Plan, begun in 1958, which forced collectivization of agriculture and rapid industrialization

23. Nationalization: a shift of part of an economy, from private ownership to government ownership

24. Keirestsu: independently owned group of Japanese firms joined and governed by an external board of directors in order to regulate competition.

26. Russia a new world economic Power?

27. China’s growth

28. 70% of goods in WalMart are made in China

29. Any movement toward democracy?

30. Review Question: Chapter 2 : Lesson 3 Read pages 56-64 and answer Review Questions on page 64. Hand in Google Class Room.