Reading mixed capitalism and communism

Another economic system is communism or command system. This is an economic system under which the government controls the factors of production. Land, labour and capital are under the control of the government and entrepreneurship is supplied by the government. As a result, all the economic decisions about production, distribution, consumption, and property ownership are made by the government. It decides what will be produced, who will produce it, how many units will be made, how much it will cost and who will receive. Supply and demand and competition have no influence in this system. Central government planners make all the economic decisions about production and resource allocation. Practically speaking, the command economy allows the government to act as a dictator.

Historical practice has shown that communism would not change capitalism automatically and directly. Its partisans assure that communism is coming through socialism, which is considered as the first stage of communist society, or as an economic subsystem in which much property is private, but the government controls the operation and direction of basic industries. This control and direction are based on the belief that there are certain products and services that everyone should have. The industries which normally are under control of government include mining, steel production, transportation, communication, health care and automanufacturing.

Fortunately a community or a country does not have to make a complete choice between the two extremes: the market economy and the command economy. Instead it can compromise and have a mixed economy. It is an economic system based on a market economy with limited government involvement. The government has abandoned the principle of the invisible hand in favor of a more visible involvement in economic life. In mixed capitalism the government has two economic tools: the power to tax and the power to spend. By taxing individuals and businesses it acquires funds to provide essential public programs: defense, education, transportation and social services. In turn the money spent for these services creates more demand for the goods and services produced by businesses.

Even in the USA, a stronghold of free enterprise, it was found necessary to control or regulate national income conditions. As to Britain, today it has a mixed economy. In the public sector of British economic life are the nationalized industries like coal and steel, British Rail and British Overseas Airways Corporation. In the private sector are the majority of the nation’s industries, both large and small, from giants like ICI (Imperial Chemical Industries, founded in 1926) and BP (British Petroleum, 1909) to small family business.

So, when you examine the economic systems in the world today you will discover, that no examples of pure capitalism, or pure communism exist. Most economies are grouped in the centre of a continuum, that stretches from the complete private ownership and market economy of pure capitalism to the total public ownership of communism.

Comprehension check

I. Have you changed your opinion about different economic systems after reading the text? Would you like to live in a capitalist or a socialist country? Say why. In your opinion what kind of economic system is there in Russia? What kind of system would you like to see in our country in the future?

II. Answer the following questions.

1. What is the difference between pure and mixed capitalism?

2. What is mixed capitalism as an economic system based on?

3. What economic tools does the governments have in a mixed economy?

4. Does the money spent for social services create more or less demand for the goods produced?

5. Are you a partisan of free market or government regulating of economy? Why?

6. How can you define the communist system in comparison with capitalism?

7. What does science refer to the factors of production?

8. Who makes economic decisions in communism?

9. What are the main features of socialism?

10. What kind of economic system does Great Britain have?

11. Who controls the operation and direction of basic industries in modern Russia?

12. What kind of society is Russia building now? What do you think of it?

III. Complete the sentences.

1. Great Britain’s private sector includes both…

2. A mixed economy is a compromise between…

3. Under socialism everybody should have…

4. The other name of communism is…

5. Competition has no influence under…

6. The power to tax and the power to spend are…

7. The money paid as taxes by businessmen and individuals go to…

8. Great Britain has nationalized such industries as….

9. We can say that there are no examples of … in the modern world.

IV. Translate into English.

1. Социализм является экономической подсистемой, в которой правительство осуществляет контроль за деятельностью и управлением базовых отраслей.

2. В Швеции правительство владеет транспортной сетью, связью, банками и другими отраслями экономики.

3. При социализме значительная часть собственности находится в частных руках.

4. В бывшем Советском Союзе все экономические решения о производстве, распределении и потреблении товаров принимались правительством.

5. В современной России факторы производства находятся как в руках государства, так и у частных лиц.

6. Отрасли, находящиеся под контролем правительства России, включают железнодорожный и воздушный транспорт, атомные и тепловые станции, связь, военную промышленность и другие производства и услуги.

7. Я бы предпочел экономическую систему, в которой господствует частная собственность, а мой друг – сторонник общественной собственности.

8. Обществу не обязательно выбирать между крайностями – компромиссом может быть смешанная экономика.

9. В системах со смешанной экономикой правительства достаточно явно вмешиваются в экономическую жизнь.

10. США также признают необходимость контроля за национальной экономикой, хотя и считаются оплотом свободного предпринимательства.

Word power

I. Give English equivalents for the following words and phrases from the text.

Быть под контролем кого-либо, контролировать факторы производства, предпринимательская инициатива исходит от правительства, принимать решение о чем-то, частная собственность, не иметь влияния в, экономическая подсистема, основные отрасли, здравоохранение, частное предпринимательство, общественная собственность, орудие экономического воздействия, вмешательство в экономическую жизнь, обеспечивать выполнение общественных программ, создавать спрос на товары и услуги.

II. Match synonyms in columns A and B.

A. B.

to control to manufacture

to supply value

to produce to give up

cost to provide

to allow to supervise

a partisan unseen

to abandon to let

invisible to obtain

to acquire most part

a stronghold to persuade

the majority a base

to assure of an advocate

III. In the text find words which are derived from the following words. Continue the chains, consulting the dictionary.

to govern –

to distribute –

to dictate –

to communicate –

to transport –

to own –

Think of the nouns which can go after these verbs. Make up as many phrases as you can.

Grammar Revision

Translate the following sentences into Russian paying attention to the Past and Future Simple Tenses in Active and Passive Voice.

1. The turnover between these countries decreased 3 years ago.

2. The board of Directors believes that the export of goods will go up next year.

3. The prime minister rejected forecasts of a sharp rise in unemployment and difficult times of economic reforms.

4. Our General Manager returned from France some time ago where he studied the latest trends of the world economic development.

5. The prime minister was invited to the exhibition to Prague where he spoke about further cooperation between our countries.

6. It’s hardly possible that this bank will go bankrupt.

7. This innovation enabled the company to lower their costs and prices.

8. After we contact the manufacturers, the design of our new computer will be changed.

9. What advantages of the new product did he stress?

10. I’m sure they’ll make an interesting report if they study this problem.

11. As he only starts his business he will need a lot of money to pay for the tools and equipment.

12. Most British companies were nationalized by labour governments for political reasons, reflecting a desire to control the economy.

Quick Reading

Read the following text quickly and answer the following questions.

- What is the text about?

- Whom is the text about?

Translate the text and think of the title.

In the 18^th century new technologies were invented and applied to the manufacture of cotton and wool, iron, transportation and agriculture which was called “Industrial Revolution”.

Adam Smith was keenly interested in these events. He wanted to understand the sources of economic wealth, and he used his acute powers of observation and abstraction in order to find the answer.

His answer was: the division of labour and free domestic and international markets. Smith identified the division of labour as the source of “The great improvement in the productive powers of labour. The division of labour became even more productive when applied to creating new technologies.

Scientists and engineers, trained in extremely narrow fields, became specialists at inventing. Their powerful skills speeded the advance of technology. Machines started performing repetitive operations faster and more accurately than people.

But, said Smith, the fruits of the division of labour are limited by the extent of the market. To make the market as large as possible, there must be no impediments to free trade both within a country and among countries.

Smith argued that when each person makes the best possible economic choice based on self-interest, that choice leads as if by an invisible hand to the best outcome for society as a whole.

Talking Point

Make up dialogues discussing the advantages and disadvantages of different economic systems.

Text 4

Pre-reading task

a) Discuss the following questions before reading the text.

1. What does the word “equality” mean for you? Do you think people must be economically equal? Why?

2. It sometimes happens that there are a lot of goods of one kind in the shops and the lack of others. Do you think it can be regulated? Who is to be responsible for it?

3. Give your idea of efficient economy. Do you consider Russian economy efficient? Why/why not?

b) Key words: efficiency, equity, growth, exchange, gains, lasses, output, equilibrium.

Look up the key words in the dictionary to find out the exact meaning. Write them out.