Economic Systems Vocabulary

Capitalism

An economic system where private ownership, free market competition, and minimal government intervention drive the production and distribution of goods and services.

Socialism

An economic and political system in which the state or community collectively owns the means of production, aiming to reduce or eliminate class distinctions.

Communism

A system of communal ownership with no private property where goods and services are distributed based on need, ideally resulting in a classless society.

Bourgeoisie

The group in society that owns the means of production and holds significant economic power.

Exploitation

The practice of deriving profit by paying workers less than the full value of the goods or services they produce.

Surplus Value

The difference between the value created by labor and the wages paid to labor, which is taken as profit.

Social Class

A system that categorizes individuals based on factors such as wealth, income, occupation, education, and social status, influencing access to opportunities and resources.

Proletariat

The working class—typically those who sell their labor for wages—and often considered to be exploited by the capitalist class.

Labor

The human work effort involved in producing goods and services.

Free Market

An economic system where the prices and production of goods and services are determined by supply and demand with little or no government interference.

Artisan Guilds

Associations of skilled craftsmen from medieval times that regulated quality, production, and trade within their crafts.

Utopian Socialism

A strand of early socialist thought that envisioned ideal, harmonious societies based on communal living and cooperative ownership.

Combination Acts

Historical laws that restricted workers from forming unions or engaging in collective bargaining.

Henri de Saint-Simon

A social theorist whose ideas contributed to early socialist thought by emphasizing social order and collective welfare.

Charles Fourier

An early thinker who proposed visionary ideas for self-sustaining, cooperative communities.

Robert Owen

A reformer known for establishing model communities and advocating for improved labor conditions and cooperative living.

Louis Blanc

A thinker who championed state intervention and the creation of worker cooperatives to support labor interests.

Pierre Joseph Proudon

A political economist renowned for critiquing private property and promoting mutualist ideas.

Laissez Faire

A doctrine advocating minimal government intervention, allowing market forces to regulate economic activity naturally.

Tariffs

Taxes imposed on imported goods, often used to protect domestic industries and generate government revenue.

Alienation

The process by which workers become estranged from the products of their labor, their creative potential, and from each other under capitalist production systems.

Adam Smith

A renowned economist, often called the 'Father of Economics,' whose seminal work laid out the principles of free market capitalism and the division of labor.

Mercantilism

An economic theory from the 16th to 18th centuries that emphasized state regulation, the accumulation of wealth through trade surpluses, and national economic power.

False Consciousness

A concept describing how individuals may be misled about their true social and economic interests by prevailing ideologies.

Karl Marx

An influential revolutionary thinker whose analyses of capitalism and class struggle have profoundly shaped socialist theory.

The Wealth of Nations (1776)

A seminal work that articulated the principles of free market capitalism and the division of labor.

The Communist Manifesto (1848)

An influential political pamphlet outlining the theory of class struggle and advocating for the overthrow of capitalist systems.