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Capitalism and Communism (Capitalism (Problems (Political (Major…
Capitalism and Communism
Capitalism
How does it work?
The conomic activity is regulated by the market, which is governed by the law of supply and demand. In this system there is predomiance of private property and free competition between companies. It has been adopted by the majority of the countries.
Law of supply and demand
It is the interaction between the supply of a resource and the demand. A low supply and high demand, increases price, and the greater the supply and lower demand is, the price lowers.
Problems
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Economic
Capitalism generates periodic crises, when the competition reduces businesses profits they employ less workers.
Social
The search for greatest individual profit leads to insufficent investment in goods and social services, which endangers the poors.
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Ideologies
Keynesian
They promote greater public expenditure to protect the poorest. The existence of public enterprises and increase of salaries to create demand.
Neoliberal
They defend the total liberalisation of the economic system. They consider the State an obstacle to freedom. State enterprises should be privatised, salaries reduced to increase company profits.
Communism
How does it work?
The economic activity is regulated by the State. They decide what to produce and who to produce it for. Also the State sets product prices and workers salaries. In this system there is not rich or poor.
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