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Economic Theories: by Sara Sarmiento and Daniela Zuluaga - Coggle Diagram
Economic Theories: by Sara Sarmiento and Daniela Zuluaga
Communism
Marxism is an idea that is based on communism, which means that the machinery of production would be own by the people instead that of private companies. If there is no private property everything will benefit everyone.
Cause: In capitalism the major industries could en up becoming a monopoly and controlling the whole market, leaving small business in bankrupt and many people poor. Plus, the bourgeoise would keep getting richer and the the proletariat would keep being poor with little opportunities.
Effect: The proletariat class could revolt and strike against their oppressors and seize control of the economy to distribute good equally. Creating a dictatorship of the proletariat.
In socialism the government is the owner of everything and distributes goods, on the other hand in communism the state doesn't exist and people mange their own economy.
Laisser Faire
Laisser Faire is the idea for people to have freedom to do whatever they want in the market without government approval, if the government does not interfere the economy gets better.
In Laisser Faire the government does not get into the business of economy, but in the idea of Utopian societies the government doesn't exist at all.
Both theories state the government is an institution that doesn't let economy reach its full potential, and therefore should not be present in the managing of the market.
Utilitarism
Jeremy Bentham
Utilitarism is the economic theory that decisions should be taken based on its usefulness, if it benefits the majority of the population and if the gains are greater than the risks.
John Stuart agreed with government intervention to help reduce inequality and make the best decisions for the economy, while Jeremy believed that the government should not manage the economy.
John Stuart Mill
He also believed that the government should strive to reduce the difference between rich and poor through better education, prison systems and taxes.
The ideas of communism and uteletarism both want the best for the most amount of people. In uteletarism decisions are made based on how much people would be benefited by this action like communism that is the idea of having no private property, everything is of everyone and everyone can be benefited from this property.
Cause: In both of these cases the working class lives in terrible conditions and the factories workers face long hours in dangerous and dirty conditions. In general the public health was a catastrophe.
Effect: Unions were created to do collective bargain and fight for more humane conditions. Striking (refusing to work) if it was necessary. Plus women movements also started since they had less rights and even though they worked at factories as well, they had fewer wages than men.
(Addition to cause: There was also slavery in many countries in which people also lived miserably)
Effect: Many reformers fought for the abolitionism so that slaves could be free. And even though it took some time and countries like USA entered in a civil war for it, slavery was finally ended.
This effect has a similarity with some ideas like Utilitarism and capitalism, just like reformers wanted slaves to have a decent and free life, other reformers wanted the same decency for prisoners and have a proper life when they are free. That is why the prison reforms was another important movement.
Both argued that there should be reforms in education so that the system is better and thus society can have better leaders and workers.
Capitalism
Ricardo
He agreed with the idea of a Laisser Faire capitalism, and he reflected on the idea that there has to be a permanent underclass in order for the labor price to be stable. In the amount of poor people decrease, it would cost more to hire workers and companies would not be able to work with the same efficiency.
Cause: According to Malthus with the exponential rising in population there would not be enough food and many people would be part of the poor class
Effect: According to Ricardo that means that the labor price would become very cheap and perhaps more industries would be able to hire workers.
Malthus
Capitalism is the economic system in which people invest their money in business to gain monetary resources, and depending on the success and amount of inversions people are more or less wealthy. Malthus believed that 1) with over population and no wars or epidemics to control it many people will be poor and 2) the economy and markets should be free.
This two economic ideas are similar in the way that if there is a good economy they will have the freedom to do whatever they want in the business market.
Sociailism
It is the economic theory that states the government should distribute the factors of production equally among the citizens with the goal of shrinking the gab between rich and poor and giving everybody better life conditions.
These two economic ideas seek for equality by distributing factors of production among the citizens. In communism the machinery is no longer a private property as well in socialism that equally distributes the factors of production.
Utopian
The Utopian economic theory is the idea in which there is equality in a monetary way in the community as well in education