Begin with: c Have youused any new expressions from the text in your summary?written 10 sentences?checked your spelling?checked punctuation and grammar?heck your work

UNIT 8

CAPITALISM AND SOCIALISM

• SPEAKING

Task 1. Discuss these questions with a partner.

• What do you know about Adam Smith's theory?

• What have you heard about mixed economies?

• What advantages and disadvantages of two systems can you provide?

• STUDY SKILLS

The name game

In a highly competitive marketplace, thinking up distinctive names for new companies and their products is a specialist business. Lexicon Naming, who gave us “Pentium” and “Powerbook”, designed the following Name Game to test people’s branding skills.

Task 2. Work in groups. You are Lexicon Naming. Hold a meeting to choose the brand name that best matches the image the four client companies below would like to project. See page 132 for suggested answers.

Client 1	This cutting-edge video game company targets young males with its fast, action-packed titles.
	a Zule b Zyex c Mimem d Lura
Client 2	This environmentally progressive cosmetics company manufactures comforting, healing and improving products for women aged 18-34.
	a Tromos b Vaxlaz c Dartu d Ios
Client 3	This manufacturer specialises in miniature high tech gadgets like cell phones and PDAs. Their products are powerful, reliable, advanced, yet also lightweight and user-friendly.
	a Parmeon b Semsa c Areon d Zytos
Client 4	This prescription pharmaceuticals firm develops and manufactures innovative drugs for the traditional marketplace and for biotech applications.
	a Sylag b Tura c Zantis d Bagnum

Task 3. Complete the sentences using the words in the boxes.

growing coming pooling pouring sowing trickling

Money is liquid

a They're ______ millions of dollars into R&D.

b A small amount of cash has started _____ in.

c We should be ______ our resources – together we'd have sufficient capital to fund new research.

Ideas are plants

d After years of work, our plans are finally______ to fruition.

e There's ______ support for the project – most of the people we spoke to think it's a good idea.

f They're ______ the seeds of doubt in the mind of the customer and, as a result, we're losing sales.

victory attack goalposts guns stakes fight odds idea

Argument is war

g They shot down my ______ before I’d even had a chance to explain it.

h We came under______ from the marketing team.

i He didn't put up much of a ____. In fact, he just seemed to give in completely.

j She stuck to her ______ and refused to move an inch.

Competition is sport

k We've scored a significant ______ in the home market.

l The ______ are high – we're risking the future of this company.

m The ______ are against us, but there's still a chance we can succeed.

n We don't know what our objectives are supposed to be because they keep moving the _________.

• READING

Task 4. Read the text and choose the best title. Compare your answers with other students.

1. The Secrets of Capitalism

2. In Search of Excellent Mixture

3. The Sociology of Economic Life

....

While Adam Smith saw government interfer­ence with the free market as a hindrance to economic efficiency, Americans are more likely to see government control as a threat to their individual freedoms in a democracy. For many people, the alternative to economic freedom is socialism – an imprecise term for a system of public ownership and management of the means of production and distribution of goods. The dangers of centralized economic and politi­cal power are clearly seen in the totalitarian so­cialist states. In the Soviet Union and Cuba, a command economy is part of a repressive polit­ical system in which personal as well as eco­nomic freedom is severely restricted. The ad­vantage of capitalism is that private enterprises provide separate power bases which offset and even oppose the state's power over the lives of its citizens.

However, government intervention in the economy does not necessarily destroy demo­cratic liberty. All capitalist countries have mixed economies which combine a relatively free mar­ket with some government controls. In the American free enterprise system – probably the least regulated of all capitalist economies – the federal government supports farm prices, limits foreign imports, sets minimum wages, provides Social Security benefits, and influ­ences economic activities through its tax and budget policies.

On the other hand, a free market economy does not guarantee political liberty. Many free-enterprise systems – in Chile, Kenya, Pakistan, and South Korea, for example – are associated with authoritarian regimes. Some economic freedom appears to be necessary for political democracy, but free enterprise by itself is not enough to ensure it. The political issue, then, is how to prevent the combination of political and economic power that leads to tyranny.

The economic issue is whether the free market is still the most efficient means of dis­tributing goods and services. By reducing com­petition, socialist systems have produced noto­rious inefficiencies. When free enterprise is replaced by highly centralized bureaucracies, as it is in the Soviet Union, a typical displacement of goals takes place: the rules and procedures for meeting production goals are followed to the letter without as much concern for the quality and quantity of consumer goods being pro­duced. Furthermore, in a society where every­one is guaranteed a job, there is little incentive to improve workmanship and productivity. As a result, shoddy goods, haphazard distribution, and unpredictable shortages plague the Soviet economy.

Classical economists share Adam Smith's belief that the invisible hand should not be hampered by government interference in the market. We have seen, however, that laissez-faire policies eventually led to monopolistic concentration and a disastrous depression, and that the government has usually intervened to protect rather than oppose the competition of the free market. Moreover, even if we wanted to go back to the "good old days" of competi­tive capitalism, we could hardly do so. Today corporate giants like the "Fortune 500" are well protected against the pressures of the market. Furthermore, a return to laissez-faire would not necessarily unleash the creative energies of in­dividual self-interest. Almost all modern work­ers are now employees: freeing IBM or Gen­eral Motors from government control would not give corporate bureaucrats much incentive to try harder. A successful return to Adam Smith's policies would require a return to Adam Smith's world, and that world has disap­peared forever.

Nevertheless, there are many ways of rear­ranging the mixture of mixed economies. In­dustrial managers in the Soviet Union now of­fer pay incentives to increase productivity, and socialist Yugoslavia is developing a genuinely competitive market for its state-owned enter­prises. The progressive capitalist countries of Europe have tried almost every possible mix of public and private ownership, central planning and open market, monopoly and competition, and worker and management control. These ex­periments with the mixed economy will proba­bly continue, as one kind of system tries to con­trol the instability inherent in capitalism and the other tries to reduce the inefficiencies in­herent in socialism.