MARXISM.
Karl Max was born in the year 1883 and he forwarded ideas that helped to shape the world. He argued that societies are based on conflicts of interests between groups over the distribution of resources .One of the groups uses power to dominate politically and economically over the other group. The domination is either through coercion or legitimacy. Max started at looking at basic elements that produces the society.
He claimed that human race survives by economic development and without laborer's power the, resources are uneconomical. Productivity was characterized by exploitation and most of the laborers were exploited thus bringing about economic inequality. Exploitation was through capitalism which is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
There are two classes under capitalism namely the Bourgeois and The Proletariat. The relationship between these two classes is exploitative since capitalists pay workers less than they produce. The capitalists extract surplus value from the workers accumulating profits.
The Bourgeois use the Mass Media and Religion as a form of ideological control to keep the masses ignorant of their exploitation. Capitalism causes alienation since under Capitalism, the worker becomes alienated from the process of production, people he works with and products they produce. This is because he lacks control over his work.
Max also argued that competition leads to increasing levels of exploitation by the capitalists. In order to stay competitive, Capitalists would have to sell goods at reduced prices. Due to reduced prices of commodities, the wages are also cut-off hence compromising the working conditions of the proletariat. As the proletarians became increasingly exploited, Max envisioned a revolution to overthrow the oppressors. Following the overthrow of the Bourgeois, society would eventually organize itself and means of production would be collectively owned.
CAPITALISM.
MERCENTALISM
This is a state and national economic policy aimed at maximizing the trade of a nation. This was done by maximizing the accumulation of gold and silver. It was dominant in Europe between 16th and 18th century. Adam Smith argued that mercantilism was after enriching the country by discouraging imports and encouraging exports.
Mercantile classes paid taxes and levies to the nation to support the armies. In exchange, the government was to enact policies that would protect their economic interests against foreign competition. These policies include: monopolizing markets with staple ports, banning of exports of silver and gold and forbidding colonies to trade with other nations.
The nation was to promote manufacturing and industry through research and direct subsidies that is, direct subsidies on the exports. The navigation act also prohibited trading in foreign ships as a way of protecting the local industries. Some of the countries that fully implemented theses policies include:
France-Jean-Baptiste Colbert, the minister of finance who increased port duties on foreign vessels entering French ports and provided bounties to French shipbuilders.
Britain had passed a navigation act which illegalised foreign vessels from engaging in coastal trade in Britain and required that all goods imported from the continent of Europe be carried on either an English vessel or a vessel registered in the country of origin of the goods. All trade between England and its colonies had to be carried in either English or colonial vessels
Eric Hobsbawm said that the industrial revolution fundamentally transformed human life. He argued that foreign demand increases the industrial revolution as witnessed in Britain. In 1750, Britain was well-prepared for industrialization. Subsistence agriculture had disappeared and it formed a single national market. Britain developed the manufacturing and the commercial sector opening up trade.. The average income increased substantially, so that effective demand rose hence collapsing foreign demand.
ADAM SMITH ‘WEALTH OF NATIONS'.
Adam Smith made an inquiry into nature and causes of wealth of nations. He demonstrated that when the government introduces free market economy, the system benefits both the government and the population. Smith wanted the state to keep taxes low and allowing free trade across borders by eliminating tariffs. He pointed out that tariffs and other taxes made life more expensive for the people while also reducing industry and trade abroad
Secondly, specialization increases the rapid economic development since it allows for economies of scale. Together with division of labor, the process of production would become more efficient. Mercantilism formulated policies which only benefited the government and the commercial class. The free markets were developed by Adam Smith and they interpreted economic welfare involving the whole population.
Capitalism was a term coined by socialists in the 19th century was incorrectly referred to us economic individualism which Adam Smith earlier called the simple system of natural liberty. Economic individualism's basic premise is that the pursuit of self-interest and the right to own private property which is legitimate. It explains the need of the government to protect individual rights. Individuals have the freedom to choose what to produce, the prices to charge and where to invest.
SOCIALISM.
Is an economy which is centrally managed and planned by the government which controls all means of production. Socialism surpasses capitalism in both economic malfunction and moral cruelty. In the 19th century, England experienced high levels of capitalism. Women and children were hired in the textile industries by cruel exploiters who subjected them to long hours of work with little pay. Richard Oastler and Robert Southey, criticised the unfavourable living conditions of the labourers.
Some critics and mostly socialists urged legislative regulation of wages and hours, compulsory education and minimum age limits for labourers. This was aimed at eradicating capitalism. Socialist theorists discouraged capitalism and individualism and stressed ideals such as brotherhood, community, and social solidarity.
BOOM AND BUST.
Boom and bust is a process of economic expansion and contraction that occurs repeatedly in the state's economy. The boom and bust cycle is a key characteristic of today's capitalist economies. During the boom economic development is witnessed, jobs are plentiful and the market brings high returns to investors. The central bank avails credit by lending money at low interest rates facilitating individuals and businesses to borrow money easily for investment. During bust the economy shrinks, people lose their jobs as investors lose money.
NEOLIBERALISM.
This is a form of liberalism where the economic factors are transferred from a public sector to the private sector hence allowing free market economy. The state never interferes with the free market economy and individuals are free on how to dispose their private property. State intervention must never compromise the right of private capital to grow the business and improve share value.