Capitalism vs. Socialism: Comparing Economic Systems

Course No. 5006
Professor Edward F. Stuart, Ph.D.
Northeastern Illinois University
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Course No. 5006
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What Will You Learn?

  • numbers Understand the differences-and surprisingly similarities-between economic systems and their underlying philosophies.
  • numbers See why there is no pure capitalist or socialist economy working in the world today.
  • numbers Explore the history and evolution of economic thought from the late 18th century to the current day.

Course Overview

All of the tradeoffs in competing economic systems—capitalism, socialism, and communism—are controversial. These systems and ideologies have undeniably shaped the way people view both the world today and modern history. But where does capitalism begin and socialism end? In short, it’s about choice and compromise.

Capitalism and socialism turn on the major societal issues of education, healthcare, social services, and taxation. And they raise civil liberties tradeoffs that weigh individual freedom against the social safety net and collective security. Because economics focuses on these pocketbook issues, many people believe the field is simply about money when, in reality, money is merely a means to an end. Economics is really about people and their lives, and societies have been in pursuit of the ideal system for centuries, one that can balance these ongoing, competing desires for freedom versus security. No one has found perfect equilibrium—the debates rage on and economies are in constant flux—but some major contenders have emerged, all of which are variations of capitalism and socialism in differing degrees and combinations. Determining which, if any, is the best possible option in a definitive way, however, is a Sisyphean task and one riddled with complications.

Understanding and endeavoring to solve these perpetual dilemmas is the job of comparative economics. By looking at the many economies around the world—their histories, their failures and successes—comparative economics attempts to uncover the influences, systems, and decisions that can do the most good for the most people. Guiding you through this complex web of values and theories is Edward F. Stuart, Professor Emeritus of Economics at Northeastern Illinois University, who is a specialist in both comparative economics and Russian and Eastern European studies. Professor Stuart has been traveling, teaching, and learning about these economic systems—in the former Soviet Union, the former Eastern Bloc, China, Scandinavia, and Europe—for more than 30 years. It could even be argued that he was born to be a comparative economist, raised in a household defined by the very debates he analyzes as personified in the libertarian views of his father and his mother’s social progressivism. This familial link to his subject offers a personal dimension to his approach, one that demonstrates his ongoing passion for the ways these debates play out on a global scale.

Economists venture to understand immensely complex systems that encompass not only finance and trade, but social structures, governments, family arrangements, geography, and more. The illuminating 24 lectures of Capitalism vs. Socialism: Comparing Economic Systems will show you the many ways the most influential modern economic theories were developed, how they function (or don’t), and how they manage to operate both together and in opposition to each other, from the rise of Soviet communism to the future of the European Union and beyond. As you compare and contrast the many ways societies tackle economic issues, Professor Stuart demonstrates that even the most controversial economic decisions boil down to a deceptively simple question: What makes a good society?

Measuring Success

One of the first misconceptions Professor Stuart clarifies is that there is no definitive way to determine if an economy is objectively “good” or “bad.” Rather, there are many statistics and data points economists can use to measure the relative health of a given system. From gross domestic product (GDP) to unemployment rates to inflation and even life expectancy, there is no shortage of measuring tools. The greatest difficulty lies not just in translating complex metrics, but in choosing which of these measurements matter. While discussion of GDP is common in the news, not everyone holds it as the absolute yardstick for economic success. And while few people would argue that low unemployment and low rates of inflation are good things for an economy, even fewer can agree as to whether either is a significant statistic to measure prosperity. As Professor Stuart notes, “people can argue forever using whatever statistics prove their point.”

If there are no foolproof conclusions to draw from the wealth of information available, how do we know when an economy “works”? What is more important, economic equality or rapid growth? Low inflation or infant mortality rates? As you progress through the history of capitalism, socialism, communism, and mixed-economies—and look at their manifestations across the world today—Professor Stuart will demonstrate that absolutes in economics are much like those in culture or politics: impossible and ultimately unhelpful. Rather, it is in finding balance, making comparisons and compromises, that economies discover how to prosper, stagnate, or, in some cases, collapse.

The Paradoxes of Prosperity

On the surface, the study of economics can seem like purely a numbers game, relying as it does on large-scale, impersonal statistics to focus attention on broad trends. This “big picture” approach can sometimes mean that the human costs of prosperity can be dismissed as simply the cost of doing business. Slavery and exploitation. Unsafe working conditions. Child labor. Government oppression. Rather than gloss over these and other issues, Capitalism vs. Socialism will take you across centuries and around the world to show you both sides of the story, diving into the history of economic systems and the individuals and groups that shaped them, whether they be famous industrialists like Josiah Wedgewood, notable economic thinkers like Adam Smith and Karl Marx, political leaders such as Stalin, FDR, or Otto von Bismarck, or the many nameless workers and citizens whose time and labor form the backbone of any economy.

If people are the real heart of economics, then it should be unsurprising that there are many paradoxes inherent in economic systems. Professor Stuart takes you through the many developments of modern economics and highlights that, while there are a host of advantages and disadvantages that must be balanced in any system, some roadblocks can arise from unexpected or counterintuitive elements. Some of these paradoxes include:

  • The necessity of strong government in free market systems. Successful, large-scale capitalist enterprise requires a strong central government to enforce property and contract laws.
  • The “paradox of thrift.” While it is smart for individuals and businesses to save and build up cash reserves to survive a recession, when the behavior becomes widespread it will eventually negatively affect total spending, incomes, production, employment, etc.
  • More money doesn’t equal more spending. Known as “marginal propensity to consume,” wealthy individuals demonstrate unstable spending habits, while poor people will almost always spend 100% (or even slightly more) of their income.
  • “All animals are equal, but some animals are more equal than others.” Professor Stuart highlights how, in his allegorical novel Animal Farm, George Orwell underscores an irony of communism in practice, wherein everyone is said to be equal but a rigid hierarchy of power exists nonetheless.

Economic History

Capitalism and socialism (and by extension, communism) are often treated as if they are always in opposition to each other, but by looking at their origins and development, you will discover that this is far from the truth; they are, in fact, inextricably connected. Many social, political, and even religious factors intersected to support the birth of capitalism at a time when new, more democratic political systems were emerging from under the oppressive shadow of feudalism. In turn, modern socialism is the direct result of the pitfalls of free-market capitalism in the 18th and 19th centuries—the exploitation and dangerous, impoverished conditions workers were often subjected to inspired reformers and political thinkers to envision new ways to create a better, more equal society. Meanwhile, other nations took socialist ideology to an extreme in various forms of authoritarian communism. Professor Stuart looks closely at these systems and their histories, revealing their strengths and weaknesses and demonstrating why there is no pure capitalist (or pure socialist) system working in the world today.

As Professor Stuart guides you through the origins and evolutions of economic thought, you will look at some of the greatest experiments and failures of the last few centuries, including the creation of early American socialist experiments, the far-reaching economic implications of World War I, how the Great Depression highlighted the instability of post-war markets, the rise and fall of Soviet communism, the mixed-model economies of Europe, the rising tide of Asian market economies, and much more. Along the way, he also shares insightful personal stories and reveals unexpected connections between economics and other facets of modern life and culture. Throughout the lectures, you will find answers to questions like:

  • Where do phrases like “when my ship comes in” and “there’s no such thing as a free lunch” originate?
  • What is the correlation between the average physical height of a population and economic growth?
  • Why are the goldsmiths of the middle ages so important in the history of modern economics?
  • Where does the concept of the money-back guarantee come from?
  • What is the link between a 19th-century socialist experiment and the microwave?
  • How did novelists like Theodore Dreiser, Upton Sinclair, Charles Dickens, and George Orwell influence the arguments surrounding various economic systems?
  • What can rock music and the Rubik’s cube tell us about post-World War II capitalism?

The End of History?

In the end, what does make a good society? If every nation, every community, and even every individual across the globe assigns a different value to the tradeoffs of social solidarity and individual freedom that define economic systems, how do we predict the future of world economies? Hundreds of economies operate side by side and every single one has advantages and disadvantages that cannot be objectively measured.

As Professor Stuart observes, we are not at the end of history; many of the questions we ask today will continue to be asked far into the future. What comparative economics promises is not a “final” form of human government or the ultimate economic plan, but rather the opportunity to uncover the ways societies have shaped—and will continue to shape—the world to fit the boundless ideals that make a good society, and what each option can tell us about ourselves, the world we live in, and the world we want to create.

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24 lectures
 |  Average 30 minutes each
  • 1
    Gorbachev's Hello and the Soviet Goodbye
    Begin your foray into comparative economics with a look at the USSR in the final few years before its collapse and the restructuring known as perestroika, which led to an increased interest in the study of capitalism versus socialism in the U.S. Examine some of the major questions that shape economic systems and close with a brief overview of the goals and scope of the course. x
  • 2
    Adam Smith, Karl Marx, Keynes, and Friedman
    Meet four of the most influential economic thinkers in history: Adam Smith, Karl Marx, John Maynard Keyes, and Milton Friedman. As you examine their individual philosophies and influences across three centuries, you may be surprised by how many of their ideas overlap even as their philosophies differ. x
  • 3
    How to Argue GDP, Inflation, and Other Data
    From GDP and inflation to unemployment and standard of living, there is no one absolute measurement that determines the health of an economy. Get an overview of the different metrics for economic success and a general understanding of how they are calculated and interpreted—and why these data points can start more arguments than they resolve. x
  • 4
    British Revolution: Industry and Labor
    Travel to the birthplace of industrial capitalism: Great Britain in the 18th and 19th centuries. A fortuitous meeting of politics, technology, and economics would shape the future and give the world innovations like insurance, corporate ownership and investment, and extended payment systems. It would also inspire writers like Charles Dickens to reveal the horrifying social repercussions of unregulated industrialization. x
  • 5
    American Capitalism: Hamilton and Jefferson
    Modern capitalism may have been born in England, but America would be defined by it from the very beginning. Look at some of the paradoxes inherent in free market systems and how Protestant religious philosophy played a significant part in the direction of the economy. Then, see how founding figures like Hamilton and Jefferson set the course for American economic dominance in the years to come. x
  • 6
    Utopian Socialism to Amana Microwave Ovens
    The many opportunities and innovations of capitalism in the U.S. did not come without a cost. Religious and political thinkers alike turned to new solutions to alleviate the often horrible conditions many workers experienced, resulting in socialist projects that fell into two camps: utopian and scientific. Close with a look at the difficulties inherent in running socialist systems in a largely market economy. x
  • 7
    The Bolsheviks: Lenin, Trotsky, and Stalin
    Examine the ways Stalin sought to exercise complete control of the Soviet economy, focusing on his Five-Year Plan for production—an object lesson in the complexities of anticipating and satisfying the material needs of a society. Professor Stuart also gives you an eye-opening look at the ways economics and politics can feed off of one another. Or, in this case, starve each other. x
  • 8
    Soviet Planning and 1,000 Left-Foot Shoes
    Examine the ways Stalin sought to exercise complete control of the Soviet economy, focusing on his Five-Year Plan for production- an object lesson in the complexities of anticipating and satisfying the material needs of a society. Professor Stuart also gives you an eye-opening look at the ways economics and politics can feed off of one another. Or, in this case, starve each other. x
  • 9
    Economic Consequences of European Peace
    The end of World War I illustrates one of the iron laws of capitalism: upheavals in one part of the world have repercussions all around it. Understand how the Treaty of Versailles set up harsh terms for a depleted Germany and why shortsighted leadership from the Allied powers led to economic fallout and, eventually, the second World War. x
  • 10
    How FDR and Keynes Tried to Save Capitalism
    Was the stock market crash of 1929 the cause of the Great Depression? Find out why Black Tuesday was actually a symptom rather than a cause and trace the origins of the Depression in the U.S. to events and policies of the 1920s, both domestic and international. Then, look at the ways FDR applied the ideas of John Maynard Keynes to help America recover from economic devastation. x
  • 11
    Social Democracy in Europe
    In the wake of economic and social turmoil in the 19th century, some European countries sought to reform the capitalist system and make it more sustainable. Examine the different motives behind the reforms, understand the differences between public and private goods, and compare and contrast the myriad ways economies can blend capitalism and socialism. x
  • 12
    Sweden's Mixed Economy Model
    Called “The Third Way” by some economists, the economic system of Sweden is perhaps the best example of a philosophy that falls between the extremes of free market capitalism and government-controlled socialism. Professor Stuart explains the many factors that have contributed to Sweden’s relative economic success and what it can teach us about mixed economies. x
  • 13
    French Indicative Planning and Jean Monnet
    Discover why France, a latecomer to industrial capitalism, was vital in shaping influential socialist theories, and how centuries of political upheaval can leave distinct impressions on a nation's economic history. From the French Revolution to World War II and beyond, France is a strong example of the ways economies are shaped by both internal and external forces. x
  • 14
    British Labour Party and National Health
    The British economy has vacillated between privatization and nationalization over time. Here you will look at one of these shifts by first examining the socialist programs introduced by a post-World War II Labour Party government (including the National Health Service), followed by the Margaret Thatcher era of deregulations and privatizations. x
  • 15
    Social Welfare in Germany: Bismarck to Kohl
    Socialist policies are not limited to the realm of idealists and reformers. Germany under Otto von Bismarck shows how socialist policies like public education, unemployment benefits, and tax-funded healthcare can be used to create more efficient workforces. See how Bismarck's ideas were used to help Germany achieve greater political power and trace the echoes of his legacy into the 20th century under Chancellor Helmut Kohl. x
  • 16
    Soviet Bloc: Conformity and Resistance
    After World War II, the Allied powers were divided by their economic policies, resulting in a divided Europe. Examine the ways Soviet Russia dominated the nations of Eastern Europe, bringing them under the umbrella of authoritarian communism, and which nations pushed back against this takeover. In contrast, also look at the policies and institutions put in place by the Western allies to rebuild Europe. x
  • 17
    Two Germanies: A Laboratory in Economics
    The post-war occupation of Germany by four separate powers—and the difficult question of how to avoid the problems that stemmed from the Treaty of Versailles just a few decades earlier—created a division that would dominate Europe for more than four decades. It also created a unique opportunity for direct comparison between communist and capitalist enterprise, which you will take advantage of here. x
  • 18
    The Soviet Union's Fatal Failure to Reform
    Despite attempts by some Soviet leaders in the mid-to-late 20th century, Russia was never able to successfully reform the oppressive and increasingly inefficient Soviet communist system. Professor Stuart shows how the authoritarian government encouraged dysfunctional behavior in production and why the resulting scarcity of decent goods and services ultimately became unsupportable. x
  • 19
    “Blinkered and Bankrupt” in Eastern Europe
    In retrospect, it would seem that communism in Eastern Europe was doomed to fail. However, when the communist governments began to collapse in the 1980s, it took many people in the West by surprise. Trace the ways Soviet communism's failures were replicated over and over again in the Eastern Bloc nations, with nearly the same results for each of them. x
  • 20
    From Chairman Mao to the Capitalist Roaders
    Professor Stuart turns his attention to China, focusing on the 20th-century influence of Soviet communism under leaders like Mao Zedong. Look at the ways China was shaped by its earlier history to be especially unprepared for industrialization on the Soviet scale and how the cultural revolution under Mao further impeded progress, eventually resulting in an overthrow of his ideas after his death. x
  • 21
    After Deng, China Privatizes and Globalizes
    How was China able to make the dramatic transformation from a nation in decline to a global economic powerhouse in just a few decades? Contrast the economic reforms under “capitalist roader” Deng Xiaoping against the earlier communist strategy under Mao, as well as against the unsuccessful attempts at similar reform in Russia under Gorbachev. Close with a look at China’s economic influence on the world stage. x
  • 22
    Asian Tigers: Wealth and State Control
    Reveal the secrets behind the remarkable transformations of the “Asian Tiger” countries of South Korea, Taiwan, and Singapore from poor countries to high-income economies in the span of 50 years. Starting with their shared features, trace their progression from authoritarian regimes to more democratic governments and compare and contrast their concentrated efforts to shape their economies. x
  • 23
    European Union: Success or Failure?
    While the European Union has been a spectacular success in its fundamental mission—preventing war between major European powers—here you will also look at the other ways it could be considered a failure. Professor Stuart presents the post-war conditions under which the EU was created and the dimensions of its economic influence, for good and ill, throughout Europe. x
  • 24
    Both Sides Now: Experiment in Slovenia
    What does the future hold for economies around the world? Using Slovenia as a model, explore some of the crucial questions concerning the evolution of world economies. Are economies becoming more similar? Or are they diverging? Is there even a clear-cut answer? The issues and debates that opened the course come full circle here; definitive answers remain elusive, but the tools provided open up a world of possibilities. x

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Your professor

Edward F. Stuart

About Your Professor

Edward F. Stuart, Ph.D.
Northeastern Illinois University
Edward F. Stuart is a Professor Emeritus of Economics at Northeastern Illinois University, where he has been a member of the faculty since 1986. He earned his Ph.D. in Economics at the University of Oklahoma, specializing in International Economics and Russian and Eastern European Studies. He teaches courses in international economics, the economics of the European Union, comparative economic systems, European economic...
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Capitalism vs. Socialism: Comparing Economic Systems is rated 4.5 out of 5 by 74.
Rated 5 out of 5 by from Outstanding! - First Econ Course I've Ever Loved! Thank you (again) to Challenger for saving me the trouble of writing a detailed review. I agree completely with his extremely positive discussion of this wonderful course. This is a fine, both broad and deep analysis of the many varieties (yes, there are varieties!) of capitalism and socialism, and every combination (yes there are combinations!) thereof. Professor Stuart explains everything with such clarity and insight, and speaks with such an expressive, eloquent voice, that I never lost interest and focus. This is truly not only the first econ course I have ever loved, it is the first one I have ever liked! I did not find it biased in the least. FWIW, I am in favor of a capitalist system with significant government oversight and welfare, including provisions for health care as a human right, as well as a significant minimum wage, a progressive tax system, and support for housing and a public education system of uniformly high quality which doesn't depend on the wealth of the people in the district. While Professor Stuart doesn't make explicit his own preferences, I believe the material discussed supports my position. (As a tiny aside, our professor also slips in some better-than-average puns, my favorite being his reference to his long-ago ownership of a Swedish car as a "Saab story.") As usual, I found the video quite helpful, with many illustrations, charts, and written versions of long quotations. And the Course Guidebook is quite well done. So - my highest possible recommendation, for all! Enjoy.
Date published: 2020-11-04
Rated 4 out of 5 by from Well presented and very interesting. Recommended. Interesting to compare differing economic systems everywhere. The course opens up plenty about history too, and how we arrive at where we are. The professor comes over as very human and likeable, with plenty of “human touch” anecdotes. I strongly recommend this course, though I was a tad disappointed with what appeared to be a dismissive approach to the Brits who voted for Brexit, the recent decision for the UK to leave the EU. Xenophobic and racist was mentioned; fairly typical recoil of the embittered elites who didn’t get their way with the referendum. In fact, the reasoning is much more complex. That aside, I thoroughly enjoyed the course, and the professor.
Date published: 2020-10-14
Rated 5 out of 5 by from Clarity of content and presentation Economics is a complex subject and often tainted by politics. Thus far, course is clear and the lecturer is very clear in his presentation and is entertaining. I highly recommend it.
Date published: 2020-08-15
Rated 5 out of 5 by from Outstanding course! Since 1991 I have watched >250 courses. This course is near the top. The professor delivers fascinating lectures in a clear and articulate style. I wish I had had Dr. Stuart when I was taking economics in college. I sincerely hope that Dr. Stuart will teach future courses for The Great Courses/The Great Courses Plus.
Date published: 2020-08-12
Rated 5 out of 5 by from extremely interesting with todays discussion about socialism and the American economy, I waned to learn more about the debate for both capitalism and socialism. Dr. Steward Stuart did a fantastic job of describing both systems. I am not a convert but appreciate the comparison of different countries.
Date published: 2020-08-08
Rated 5 out of 5 by from great refresher course Having studied economics this subject matter is not obscure to me. With this course I learned another way of looking at it.
Date published: 2020-08-06
Rated 5 out of 5 by from Great Lecturer I found this course to be an excellent study of economic systems. More importantly, I found Dr. Stuart to be an excellent teacher. He is well organized, concise, and very easy to listen to. I would buy an course that he teaches.
Date published: 2020-08-03
Rated 4 out of 5 by from Capitalism vs Socialism Lecturer was knowledgeable and has good presentation skills, including a bit of humor. Lecture lineup was a bit disjointed, not following the chronology of economic thought after 1776. Skipping briefly over some major players like Malthus and Veblen a negative Country by country discussions were interesting but at times veered away from the course title
Date published: 2020-05-06
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