economic system essay

Economic Systems Essay

Introduction Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economic system is slackly defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. There are three types of economic systems exist, they are command economy, market economy, and mixed economy. Command economy is also sometimes called planned economy . The expectations of this type of economy is that all major decisions that related to the construction or production, distribution, commodity and service prices are all made by the government. However, in market economy, national and state governments play a …show more content…

Businesses can decide which goods to produce and in what quantity and consumers can decide what they want to purchase and at what price. The role of the state is limited to ensure right precision in the prices charged by the sellers. Prices also have the function to allocate and distribute a country’s resources. Market leads to complete effectiveness bringing about the best possible distribution of a country’s resources in a perfect world. This would only happen in a state of equilibrium and there is a unique price for every commodity. But in a realistic world which is imperfect by nature, prices are never at equilibrium and very unstable depending upon the vagaries of the market forces. This generally harms people living below the poverty line. It is impossible for them to pay high prices in cases of demand shortage. Thus, the free market model is not a viable option in developing countries which has a large number of poor. Besides, producers are aim to minimize profit and maximize rent of production. Examples of countries that are using this economy system are Hong Kong, USA, and UK. Many developing countries like India and China are moving towards totally free-market economy. The command economy is government directed. The market forces have very little say in such an economy. There is no private property. On the other hand, a command economy aims at using all available resources for developing either

Command Vs Command Economy

A command economy or planned economy is an economic system in which the government or authority has control over the production and pricing of good and services. The authority selects which items and services to produce, the creation and distribution process, and the costs of goods and services. Additionally, the government has control of all lands, capital and different resources. The government or authority decides essentially the most socially effective items to provide. They also create laws and regulations that control state-owned and privately owned businesses. The choice of goods available to customers is higher in the market economy system than in the command economy system. There are 2 types of Command Economy, a strong and a Moderate

Essay on Economics 213

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

Market vs. Command Economy Essay

Additionally, Centrally Planned Economies usually involve 2 types of government: Socialism which is a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a

Command And Market Economies

Command economies rely on the government to control and manage the business, while market economies rely on the work of individuals who make all the decisions for the business. To explain, command economies focus on the aspect of communism which is a system that the government controls all aspects of production, therefore, factors of production such as natural resources or capital is controlled by the government. Alternatively, market economies focus on capitalism which explains that individuals and businesses own the resources and are free to charge what they want for their products. Although, these prices are based on the supply and demand of the company. The individuals who run the businesses are in control of the factors of production as there is little to no government control on economic

Market Economies: Similarities Between Command Economy And Socialism

A command economy is well organized by government officials because they own and direct the factors of production, while market economies are not organized. Market economies are unplanned because they are determined by supply and demand of goods and services. Since government officials control the factors of production in the command economy it causes less unemployment, although there is no actual promotions and no one is praised for their work. There is more unemployment in the market economy because no one is equal, therefore everyone must do the best to provide for themselves and their families. Being successful in the market economy is about being able to be a good entrepreneur because the prices of items are determined by what sells and what does not sell.

Command Vs Command Research Paper

To begin with, the major difference between a command economy and a market economy is that in a command economy, the government controls all aspects of the business with little to no say from the business owner. For example, in places such as China and Russia, the government answers the three economic questions that dictate who the market is, what to make, and how to make it. On the other hand, in a market economy, the business owner has the right to control all aspects of their business as long as they follow the guidelines set by the government that they chose. Additionally, by choosing the government officials in a market economy, the business owner is able to choose a representative that will best support their views. In closing, there are vast differences between a market and command economy such as in a market there is choice, where as a command is completely controlled.

Market Command Economic System

Compare and contrast the characteristics of a market economy system vs a command economy system

Five Characteristics Of A Command Economy

A command or planned economy is a system economy where everything about economy is controlled by the government. This means that the government determines what kinds of goods and services to be produced, using a method or manner of goods and services will be made up and who will consume those goods and services. So that, a command economy, it is easier for the government to control the inflation, unemployment and other economic problems. Command economy is benefit for the society because the government seeks to provide for everyone and it maximizes social welfare.

Market Vs Command Economic System Essay

that are revamping the structure and formation of the working class as a whole and

Economic Systems

The command economy is government directed. The market forces have very little say in such an economy. There is no private property. On the other hand, a command economy aims at using all available resources for developing either in advertising or marketing. In order to ensure that the required inputs are available, the state would probably conduct some form of input-output analysis. All industries act as the input from other industries and the producers act as the

Why Did The Government Intervene In The Economy

Economic systems decide what should be produced, as well as how and for whom goods and services will be produced. In most economies both the government and the market system make economic decisions.Ideal conditions for market operations are competition among buyers and sellers, so that no single trader has any control over the price of goods or services being exchanged; as well as the ability of buyers to exclude others

Command Economy Vs Command Economic System

In economy, societies have to make a choice of which system they will apply in their situation. These economic systems are chosen based off of how the society answers three economic questions. These three economic questions are: “What goods should be produced?” “How should they be produced?” And “From whom will it be produced?” Two of the most commonly seen systems in our world are command economies and market economies. Both which work in different ways and have different advantages and disadvantages that come with them. However only one of them can be better. In the following paragraphs, research done will show how both systems work, their advantages and disadvantages, and which system is better based off it.

Command Economy Outline

In the economy world there are many different kinds but I will be focus on the most important. Command and market economies rule the world we live in today. A command economy is controlled by the government and they make every single decision for their workers. The workers do not have a say in what they can work in or do. Market economy is when people run their own business but government may promote competition to increase the production.

Economic Systems: Capitalism Essay

• 10 Works Cited

Capitalism is an economic system characterized by the private ownership of the means of production, and where production is guided and income distributed largely through the operation of markets. The objective of a capitalist society is to gain profit.

China's Command Economy

Countries use different systems to regulate economic choices which may include command, market, traditional, closed economies, or even a combination of multiple. In a mixed market economy, such as the United Kingdom, individual citizens are granted the right to make their daily economic decisions without interference from the government. In contrast, China’s command economy is quite the opposite, with its economy completely controlled by the government and their actions. The

Related Topics

• Planned economy
• Economic system
• Economic systems
• Supply and demand

1.1 What Is Economics, and Why Is It Important?

Learning objectives.

By the end of this section, you will be able to:

• Discuss the importance of studying economics
• Explain the relationship between production and division of labor
• Evaluate the significance of scarcity

Economics is the study of how humans make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions. If you look around carefully, you will see that scarcity is a fact of life. Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Of course, the ultimate scarce resource is time- everyone, rich or poor, has just 24 expendable hours in the day to earn income to acquire goods and services, for leisure time, or for sleep. At any point in time, there is only a finite amount of resources available.

Think about it this way: In 2015 the labor force in the United States contained over 158 million workers, according to the U.S. Bureau of Labor Statistics. The total land area was 3,794,101 square miles. While these are certainly large numbers, they are not infinite. Because these resources are limited, so are the numbers of goods and services we produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.

Introduction to FRED

Data is very important in economics because it describes and measures the issues and problems that economics seek to understand. A variety of government agencies publish economic and social data. For this course, we will generally use data from the St. Louis Federal Reserve Bank's FRED database. FRED is very user friendly. It allows you to display data in tables or charts, and you can easily download it into spreadsheet form if you want to use the data for other purposes. The FRED website includes data on nearly 400,000 domestic and international variables over time, in the following broad categories:

• Money, Banking & Finance
• Population, Employment, & Labor Markets (including Income Distribution)
• National Accounts (Gross Domestic Product & its components), Flow of Funds, and International Accounts
• Production & Business Activity (including Business Cycles)
• Prices & Inflation (including the Consumer Price Index, the Producer Price Index, and the Employment Cost Index)
• International Data from other nations
• U.S. Regional Data
• Academic Data (including Penn World Tables & NBER Macrohistory database)

For more information about how to use FRED, see the variety of videos on YouTube starting with this introduction.

If you still do not believe that scarcity is a problem, consider the following: Does everyone require food to eat? Does everyone need a decent place to live? Does everyone have access to healthcare? In every country in the world, there are people who are hungry, homeless (for example, those who call park benches their beds, as Figure 1.2 shows), and in need of healthcare, just to focus on a few critical goods and services. Why is this the case? It is because of scarcity. Let’s delve into the concept of scarcity a little deeper, because it is crucial to understanding economics.

The Problem of Scarcity

Think about all the things you consume: food, shelter, clothing, transportation, healthcare, and entertainment. How do you acquire those items? You do not produce them yourself. You buy them. How do you afford the things you buy? You work for pay. If you do not, someone else does on your behalf. Yet most of us never have enough income to buy all the things we want. This is because of scarcity. So how do we solve it?

Visit this website to read about how the United States is dealing with scarcity in resources.

Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn’t enough money in the budget to do everything. How do we use our limited resources the best way possible, that is, to obtain the most goods and services we can? There are a couple of options. First, we could each produce everything we each consume. Alternatively, we could each produce some of what we want to consume, and “trade” for the rest of what we want. Let’s explore these options. Why do we not each just produce all of the things we consume? Think back to pioneer days, when individuals knew how to do so much more than we do today, from building their homes, to growing their crops, to hunting for food, to repairing their equipment. Most of us do not know how to do all—or any—of those things, but it is not because we could not learn. Rather, we do not have to. The reason why is something called the division and specialization of labor , a production innovation first put forth by Adam Smith ( Figure 1.3 ) in his book, The Wealth of Nations .

The Division of and Specialization of Labor

The formal study of economics began when Adam Smith (1723–1790) published his famous book The Wealth of Nations in 1776. Many authors had written on economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way. In the first chapter, Smith introduces the concept of division of labor , which means that the way one produces a good or service is divided into a number of tasks that different workers perform, instead of all the tasks being done by the same person.

To illustrate division of labor, Smith counted how many tasks went into making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, and packaging pins for sale, to name just a few. Smith counted 18 distinct tasks that different people performed—all for a pin, believe it or not!

Modern businesses divide tasks as well. Even a relatively simple business like a restaurant divides the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located. A complex business like a large manufacturing factory, such as the shoe factory ( Figure 1.4 ), or a hospital can have hundreds of job classifications.

Why the Division of Labor Increases Production

When we divide and subdivide the tasks involved with producing a good or service, workers and businesses can produce a greater quantity of output. In his observations of pin factories, Smith noticed that one worker alone might make 20 pins in a day, but that a small business of 10 workers (some of whom would need to complete two or three of the 18 tasks involved with pin-making), could make 48,000 pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons.

First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage. (In later chapters, we will develop this idea by discussing comparative advantage .) People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents. Only those with medical degrees qualify to become doctors, for instance. For some goods, geography affects specialization. For example, it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more effective than if they produce a combination of things, some of which they are good at and some of which they are not.

Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better.

A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products (sometimes called its “ core competency ”) is more successful than firms that try to make a wide range of products.

Third, specialization allows businesses to take advantage of economies of scale , which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only 100 cars per year, each car will be quite expensive to make on average. However, if a factory produces 50,000 cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower. The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity.

Trade and Markets

Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need. In short, specialization requires trade.

You do not have to know anything about electronics or sound systems to play music—you just buy an iPod or MP3 player, download the music, and listen. You do not have to know anything about artificial fibers or the construction of sewing machines if you need a jacket—you just buy the jacket and wear it. You do not need to know anything about internal combustion engines to operate a car—you just get in and drive. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy.

Why Study Economics?

Now that you have an overview on what economics studies, let’s quickly discuss why you are right to study it. Economics is not primarily a collection of facts to memorize, although there are plenty of important concepts to learn. Instead, think of economics as a collection of questions to answer or puzzles to work. Most importantly, economics provides the tools to solve those puzzles.

Consider the complex and critical issue of education barriers on national and regional levels, which affect millions of people and result in widespread poverty and inequality. Governments, aid organizations, and wealthy individuals spend billions of dollars each year trying to address these issues. Nations announce the revitalization of their education programs; tech companies donate devices and infrastructure, and celebrities and charities build schools and sponsor students. Yet the problems remain, sometimes almost as pronounced as they were before the intervention. Why is that the case? In 2019, three economists—Esther Duflo, Abhijit Banerjee, and Michael Kremer—were awarded the Nobel Prize for their work to answer those questions. They worked diligently to break the widespread problems into smaller pieces, and experimented with small interventions to test success. The award citation credited their work with giving the world better tools and information to address poverty and improve education. Esther Duflo, who is the youngest person and second woman to win the Nobel Prize in Economics, said, "We believed that like the war on cancer, the war on poverty was not going to be won in one major battle, but in a series of small triumphs. . . . This work and the culture of learning that it fostered in governments has led to real improvement in the lives of hundreds of millions of poor people.”

As you can see, economics affects far more than business. For example:

• Virtually every major problem facing the world today, from global warming, to world poverty, to the conflicts in Syria, Afghanistan, and Somalia, has an economic dimension. If you are going to be part of solving those problems, you need to be able to understand them. Economics is crucial.
• It is hard to overstate the importance of economics to good citizenship. You need to be able to vote intelligently on budgets, regulations, and laws in general. When the U.S. government came close to a standstill at the end of 2012 due to the “fiscal cliff,” what were the issues? Did you know?
• A basic understanding of economics makes you a well-rounded thinker. When you read articles about economic issues, you will understand and be able to evaluate the writer’s argument. When you hear classmates, co-workers, or political candidates talking about economics, you will be able to distinguish between common sense and nonsense. You will find new ways of thinking about current events and about personal and business decisions, as well as current events and politics.

The study of economics does not dictate the answers, but it can illuminate the different choices.

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How to Write a Good Economics Essay

Last Updated: March 7, 2023 References

This article was co-authored by Emily Listmann, MA . Emily Listmann is a private tutor in San Carlos, California. She has worked as a Social Studies Teacher, Curriculum Coordinator, and an SAT Prep Teacher. She received her MA in Education from the Stanford Graduate School of Education in 2014. This article has been viewed 127,303 times.

A good economics essay requires a clear argument that is well-supported by appropriately referenced evidence. Research your topic thoroughly and then carefully plan out your essay. A good structure is essential, as is sticking closely to the main essay question. Be sure to proofread your essay and try to write in formal and precise prose.

Preparing to Write Your Essay

• For example a question such as “Discuss the macroeconomic consequences of rising house prices, alongside falling interest rates” could be divided into 2 parts: 1 part could be on the effects of rising prices, and 1 on the effects of falling interest rates.
• In this example you could begin by discussing each separately and then bringing the 2 together and analysing how they influence each other.
• Be sure to keep the question at the forefront of your mind and don’t veer off topic. [1] X Research source

• Be sure that you understand all the key terms that you are being asked about.
• Try to keep your reading focussed closely to the essay question.
• Don’t forget to look at any lecture or class notes you have made.
• 3 Come up with a thesis statement . A thesis statement is the main argument you will make in your essay. It should be 1-2 sentences long and respond to the essential question that’s being asked. The thesis will help you structure the body of your essay, and each point you make should relate back to the thesis.

• Once you have put together a list of key points, then try to add in some more detail that brings in elements from your research.
• When you come to write out your essay, you can develop a paragraph based on each point.

• All of the evidence and explanation will be in the main body of the essay.
• Order the key points in the body of your essay in such a way that they flow logically.
• If you are writing a longer essay, you can break the main body into different sections. [2] X Research source
• If you have a word limit, be sure to take this into account when you are planning.
• Allocate yourself a rough number of words per section.
• The introduction and conclusion can be just a paragraph each.

Writing the Essay

• What your essay is about.
• What material you will cover in the essay.
• What your argument is. [3] X Research source

• Having this stated clearly at the start can help you to stay focussed on the question as you work your way through the essay.
• Try writing out this one or two sentence statement and sticking it up in front of you as you write, so it’s stays at the forefront of your mind.

• Try to begin each paragraph with a sentence that outlines what the paragraph will cover.
• Look at the opening sentence of each paragraph and ask yourself if it is addressing the essay question. [5] X Research source

• Try to engage with arguments that run counter to yours, and use the evidence you have found to show the flaws.
• It might help to imagine someone reading the essay, and anticipating the objections that he might raise.
• Showing that you have thought about potential problems, and you can make an argument that overcomes them, is a hallmark of an excellent essay. [6] X Research source
• If there is conflicting evidence, discuss it openly and try to show where the weight of the evidence lies. [7] X Research source
• Don’t just ignore the evidence that runs counter to your argument.

• In the conclusion you can add a few sentences that show how your essay could be developed and taken further.
• Here you can assert why the question is important and make some tentative suggestions for further analysis.

Proofreading and Making Revisions

• As you read through it, think about how closely you stick to main overarching question.
• If you notice paragraphs that drift off into other areas, you need to be tough and cut them out.
• You have a limited number of words so it’s essential to make every one count by keeping tightly focussed on the main question.

• Think about how you use the evidence too. Do you critically engage with it, or do you merely quote it to support your point?
• A good analytical essay such discuss evidence critically at all times.
• Even if the evidence supports your argument, you need to show that you have thought about the value of this particular piece of data.
• Try to avoid making any assumptions, or writing as if something were beyond dispute. [10] X Research source

• Remember an academic essay should be written in a formal style, so avoid colloquialisms.
• Avoid contractions, such as “don’t”, or “won’t”.
• Try to avoid paragraphs that are more than ten or fifteen lines long.
• Think about how it looks on the page. [12] X Research source

• Always include a bibliography, but don’t include references to things you haven’t read or didn’t inform your argument. [13] X Research source
• Your teacher will know if you just add a load of titles into your bibliography that are not evidenced in the body of your essay.
• Always follow the bibliography format used by your department or class.

Community Q&A

You Might Also Like

• ↑ http://www.economicshelp.org/help/tips-economic-essays/
• ↑ http://www.writing.utoronto.ca/advice/planning-and-organizing/organizing
• ↑ http://carleton.ca/economics/courses/writing-preliminaries/academic-essay-writing/
• ↑ https://www.economicsnetwork.ac.uk/archive/lse_writing/page_11.htm
• ↑ http://homes.chass.utoronto.ca/~mcmillan/writing.pdf
• ↑ https://www.royalholloway.ac.uk/economics/documents/pdf/essaywriting-departmentofeconomics.pdf

About This Article

Before you begin writing your economics essay, make sure to carefully read the prompt so that you have a clear sense of the paper's purpose and scope. Once you have read the prompt, conduct research using your textbook and relevant articles. If you cannot find research materials, ask your instructor for recommendations. After your research is done, construct a 1-2 sentence thesis statement and begin outlining your main ideas so that your essay will have a clear structure. Make sure to leave time to write a draft and revise your work before it is due. If you want to learn more, like how to cite the sources you used for your essay, keep reading the article! Did this summary help you? Yes No

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The Types of Economic Systems

Introduction, types of economic systems, capitalist system, communist system, socialist and mixed economic systems, benefits to society and individuals, current trends and conclusion.

Any system that involves the mechanism for production, distribution and exchange of goods apart from consumption of the goods and services within the different entities can be classified as an Economic System. The various kinds of economic systems and their classifications broadly follow the methods by which means of ownership are established. Thus, the mode of ownership of capital leads to the different kinds of economic systems in vogue. In this paper, we discuss the different types of economic systems and their classifications based on the methods described above. In addition, we look at the advantages and disadvantages of each type of economic system and the examples of countries that have the economic systems in place. In the last section, we look at the benefits an individual might get from the different kinds of economic systems.

The different kinds of economic systems are Market Economy, Planned Economy, Centrally Planned Economy, Socialist and Communist Economies. All these are characterized by the ownership of the economics resources and the allocation of the same. For instance, in a Capitalist Economy, the capital is privately owned and distributed with governmental oversight and regulation. On the other hand, in a Communist Economy, the state itself takes on the task of allocation of resources according to the needs of the different sectors.

In a mixed economy, the state looks after some sectors whereas it frees up the other sectors for private participation. Apart from this, the extent of governmental or state intervention determines the kinds of economic systems that are classified accordingly. In many ways, each of these systems has their own pros and cons when it comes to the welfare of the citizens.

This is the predominant economic system in the world today. In this system, the capital is privately owned and distributed. The distribution mechanism is left to the market to allocate the resources with the emphasis being on efficient allocation of capital. Going by the “Invisible Hand” of Adam Smith that guides the allocation of resources, it is deemed that the market does a good job of determining which sectors receive the capital and how much. Thus, perfect knowledge and perfect competition are assumed to be given and the market mechanism is taken to determine the beneficiaries and the recipients.

In the modern context, this kind of system has come to be associated with the laissez faire mode of capitalism where the state has minimal responsibility and is seen as a “hands off” player rather than being interventionist. Of course, the state is expected to have regulatory mechanisms in place and ensure that the market corrections are supervised and the state steps in whenever there is a crisis of liquidity or other market failures.

As we are currently witnessing the different kinds of state interventions arising out of the credit crunch, it becomes apparent that this kind of economic system may not be the ideal one as was being propounded over the last few decades. In this economic system, the four kinds of land, labor, capital and entrepreneurship are the types of production that make up the mechanism for production and distribution of resources.

The capitalist system of production and distribution has proved to be highly successful in western countries and it has spawned several clones in the east as well.

In this kind of economic system, the state takes upon itself the allocation and production functions as well as distribution of the goods and services. In this system, capital cannot be privately held and there is communal ownership or what is known as “Communism”. The workers are paid uniform wages and what Marx called the “participation of the workers in the collective bargaining” is a feature of the system. This model was pursued in the erstwhile USSR before it broke up and has been considered a failure though there is debate whether it was an ideological failure or an implementation failure. Like capitalism, communism also had several takers in the newly independent economies of the east. Thus, the Cold war was fought as much between two blocs as between two competing ideologies.

In these forms of economic systems, the state has control over some areas which it deems to be of primary importance as regards national security and importance to the welfare of the citizens. Thus, the state does not allow private participation in sectors such as defense and essential goods and services whereas the entrepreneurs are provided incentives to contribute in other sectors that the state thinks fit. This kind of economic system was followed in countries like India till the 1990’s when the economies were liberalized and full private sector participation allowed. This parallels the demise of the centrally planned economy where the command and control of the economy is top down rather than bottom up. This has often led to several imbalances in the distribution and allocation of resources.

An economic system, in whatever form is necessary for the society to prosper and function as a cohesive unit. From the primitive societies of barter and the hunter gatherers to the new technocratic ages, there always has been some form of economic systems. The economic systems make up the whole system that comprised the political system, the legal system and the like.

Some of the benefits are self-evident in the sense that the individuals in a society get paid for their work and in return can buy and exchange goods and services. In other ways, the material well being of the individuals is guaranteed with promise of wages and other inducements. On the other hand, the individuals contribute to the collective pool of wealth by paying taxes that in turn make up a portion of the social security nets.

As can be seen from the prosperity of the western world, the economic systems contribute in a major way towards the sense of well being and security of the citizens. The state guarantees the rights of the citizens and in turn expects duties from them. There are instances of breakdown of economic systems in Sub-Saharan Africa that has resulted in chaos and civil war. Thus, one of the pre-requisites of the economic systems is that of a “social contract” between the individual and the state along with the legal and other forms of enforceable contracts. As can be seen, an effective economic and social system not only takes care of the constituents but also enforces the mode of behavior through a set of laws and regulations to be followed. Thus this is a kind of win-win situation for all the players concerned.

In communist societies, the state had an additional responsibility to ensure that the material well being of the citizens is taken care under the auspices of the state. Thus, one of the conditions for communal ownership was the co-ordination of the services and the goods.

The society as a whole gains from the distribution of wealth and its effects on the economy are as real as the whole structure of production and distribution of services are concerned. Society participates by providing services and gets paid in return. On the other hand the political economy enforces the contracts of the participants and the players concerned. Overall, society stands to gain from the methods of production and distribution of goods and services.

Individuals perform duties as per the market rules for participation and are guaranteed their share of the profits according to the norms of the wages prescribed.

With the advent of the Internet and the rise of the “dot com” companies, a new kind of Economic system based on the “virtual” exchange of goods and services is arising that leads to dramatic shifts of wealth around the world. However, there is also a need to refine the current market economies for them to have proper regulation and oversight. Unfettered capitalism is as risky as an absence of economic system. The whole edifice of an economic system can come down if not properly regulated and enforced.

As far as the current market crises are concerned, it is imperative that some kind of “paradigm shifts” occur within the systems and these are taken care by the regulatory authorities.

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Essay on Economic Systems

An economic system is composed of different but interrelated aspects that create an economic structure (Hayek, McWilliams & Churchill). Every society has an economic system; however, some communities have a similar system. The economic system is essential in a society because it addresses the needs and scarcity. A complex system of economy entails all means of production. Most societies have four basic economic systems, i.e., traditional economy, command economy, a pure market economy, and mixed economy. A command economy benefits society by addressing some important services such as health, however, it has a large bureaucracy that discourages new ideas.

A pure command economy is a well-organized economy system with a central institution that controls the means of production. The governing body is usually the central dominant that determines what, who, how and means of production. The demands and supply of goods and services are predetermined through statistical analysis (Hayek, McWilliams & Churchill). Private ownership is discouraged in this system. command economy is advantegous since there minimal chance of an overproduction crisis. Secondly, there is little wastage of resources and high savings. Scholars argue that the governing body can respond quickly to threats that might arise, such as military and economic threats. An example is a soviet response to communism in USSR. However, its disadvantages include limited motivation to work hard, and large bureaucracy results in little or no flexibility (Corporate Finance Institute, 2021). Individual and unique ideas are not rewarded, which also results in stagnant markets.

A Pure market economy comprises a free market where individuals and businesses bring together the buyers and sellers. Contrary to a command economy, a market economy comprises a decentralized in terms of decision making and structure. Most of the world’s economies are decentralized; they include the US economy. Market economy entails a large variety of products; there are also government interferences. As a result, consumers are highly satisfied, and there is the capability of gradual changes. However, fewer public facilities such as schools and healthcare are also at risk of unhealthy competition. Furthermore, it might face risks of market failure.

The traditional economy is a type of economic system that heavily relies mostly on agricultural production. Other activities include hunting and gathering. The traditional economy is the oldest system; the allocation of production and resources is based on rituals, customs, traditions, and customs by ancestors and elders(CK-Foundation, 2021). It is advantageous to society since different production and economic are determined based on gender and age. It is also stable and predictable. However, it is accompanied by low living standards, and economic progress is limited. In addition, it is criticized since it discourages new ideas and innovations.

A mixed economy entails both the characteristics of a market and command economy; hence it is sometimes referred to as a dual economic system (Corporate Finance Institute, 2021). Most modern economies are characterized by a mix of traditional, command, and free economies. In a mixed economy, some production like nuclear weapons is designated to the governing body while consumer goods and services are designated to the private sector since they can easily determine consumer needs (Hayek, McWilliams & Churchill). Although, mixed economy encounters balance challenge between state control and private sector, their equal distribution of goods and services while addressing consumer needs and wants. Also, most efficient producers are rewarded and also receive capital that can reinvest. Fourthly, it addresses the limitations in market economies like areas of nuclear weapons. However, efficient investors can disadvantage other businesses by lobbying states for tax subsidies. It can result in a monopoly of some products like nuclear.

There are four major economic systems, i.e., traditional, mixed, market, and command economy. Traditional economy mainly relies on agriculture, with ancestors and elders playing a subtle role in distributing roles. Command economy is composed of a central body governing production. It, however, does not address the consumers’ needs efficiently. The mixed economy comprises features of the three other economies . Since mixed addresses the limitations in market economies, e.g., addressing some important aspects of defense, it is the most preferred economic system. It also exhibits other characteristics of other economics; it further exhibits the advantages of other economic systems.

Corporate Finance Institute. (2021, January 30).  Economic System . https://corporatefinanceinstitute.com/resources/knowledge/economics/economic-system/

Foundation, C., 2021.  CK12-Foundation . [online] CK-12 Foundation. Available at: <https://flexbooks.ck12.org/user:zxbpc2rzcziwmthaz21hawwuy29t/cbook/episd-2019-2020-economics-with-emphasis-on-the-free-enterprise-system/section/1.5/primary/lesson/economic-systems/> [Accessed 21 August 2021].

Hayek, F., McWilliams, C., & Churchill, W. The economic system. Types of economic systems. Major economic systems All types of economic systems.

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BUS101: Introduction to Business

Understanding Economic Systems

Read this explanation of the United States economy. American workers are considered some of the most productive in the world. Productivity is the final output after you have considered the hours worked. Productivity in this country has grown because technology has lowered the cost of producing goods and services.

How Business and Economics Work

Global economic systems.

Businesses and other organizations operate according to the economic systems of their home countries. Today the world's major economic systems fall into two broad categories: free market, or capitalism; and planned economies, which include communism and socialism. However, in reality many countries use a mixed market system that incorporates elements from more than one economic system.

The major differentiator among economic systems is whether the government or individuals decide:

• How to allocate limited resources – the factors of production – to individuals and organizations to best satisfy unlimited societal needs
• What goods and services to produce and in what quantities
• How and by whom these goods and services are produced
• How to distribute goods and services to consumers

Managers must understand and adapt to the economic system or systems in which they operate. Companies that do business internationally may discover that they must make changes in production and selling methods to accommodate the economic system of other countries. Table 1.1 summarizes key factors of the world's economic systems.

In recent years, more countries have shifted toward free-market economic systems and away from planned economies. Sometimes, as was the case of the former East Germany, the transition to capitalism was painful but fairly quick. In other countries, such as Russia, the movement has been characterized by false starts and backsliding. Capitalism, also known as the private enterprise system , is based on competition in the marketplace and private ownership of the factors of production (resources). In a competitive economic system, a large number of people and businesses buy and sell products freely in the marketplace. In pure capitalism, all the factors of production are owned privately, and the government does not try to set prices or coordinate economic activity.

A capitalist system guarantees certain economic rights: the right to own property, the right to make a profit, the right to make free choices, and the right to compete. The right to own property is central to capitalism. The main incentive in this system is profit, which encourages entrepreneurship. Profit is also necessary for producing goods and services, building manufacturing plants, paying dividends and taxes, and creating jobs. The freedom to choose whether to become an entrepreneur or to work for someone else means that people have the right to decide what they want to do on the basis of their own drive, interest, and training. The government does not create job quotas for each industry or give people tests to determine what they will do.

Competition is good for both businesses and consumers in a capitalist system. It leads to better and more diverse products, keeps prices stable, and increases the efficiency of producers. Companies try to produce their goods and services at the lowest possible cost and sell them at the highest possible price. But when profits are high, more businesses enter the market to seek a share of those profits. The resulting competition among companies tends to lower prices. Companies must then find new ways of operating more efficiently if they are to keep making a profit – and stay in business.

Exhibit 1.5 McDonald's China Since joining the World Trade Organization in 2001, China has continued to embrace tenets of capitalism and grow its economy. China is the world's largest producer of mobile phones, PCs, and tablets, and the country's over one billion people constitute a gargantuan market. The explosion of McDonald's and KFC franchises epitomizes the success of American-style capitalism in China, and Beijing's bid to host the 2022 Winter Olympics is a symbol of economic openness. This McCafe is an example of changing Western products to suit Chinese tastes. This is an example of changing Western products to suit Chinese tastes. Do you think China's capitalistic trend can continue to thrive under the ruling Chinese Communist Party that opposes workers' rights, free speech, and democracy?

The complete opposite of capitalism is communism . In a communist economic system, the government owns virtually all resources and controls all markets. Economic decision-making is centralized: the government, rather than the competitive forces in the marketplace, decides what will be produced, where it will be produced, how much will be produced, where the raw materials and supplies will come from, who will get the output, and what the prices will be. This form of centralized economic system offers little if any choice to a country's citizens. Early in the 20th century, countries that chose communism, such as the former Soviet Union and China, believed that it would raise their standard of living. In practice, however, the tight controls over most aspects of people's lives, such as what careers they can choose, where they can work, and what they can buy, led to lower productivity. Workers had no reasons to work harder or produce quality goods, because there were no rewards for excellence. Errors in planning and resource allocation led to shortages of even basic items.

These factors were among the reasons for the 1991 collapse of the Soviet Union into multiple independent nations. Recent reforms in Russia, China, and most of the eastern European nations have moved these economies toward more capitalistic, market-oriented systems. North Korea and Cuba are the best remaining examples of communist economic systems. Time will tell whether Cuba takes small steps toward a market economy now that the United States reestablished diplomatic relations with the island country a few years ago.

Socialism is an economic system in which the basic industries are owned by the government or by the private sector under strong government control. A socialist state controls critical, large-scale industries such as transportation, communications, and utilities. Smaller businesses and those considered less critical, such as retail, may be privately owned. To varying degrees, the state also determines the goals of businesses, the prices and selection of goods, and the rights of workers. Socialist countries typically provide their citizens with a higher level of services, such as health care and unemployment benefits, than do most capitalist countries. As a result, taxes and unemployment may also be higher in socialist countries. For example, in 2017, the top individual tax rate in France was 45 percent, compared to 39.6 percent in the United States. With both countries electing new presidents in 2017, tax cuts were a campaign promise that both President Macron and President Trump took on as part of their overall economic agendas.

Many countries, including the United Kingdom, Denmark, India, and Israel, have socialist systems, but the systems vary from country to country. In Denmark, for example, most businesses are privately owned and operated, but two-thirds of the population is sustained by the state through government welfare programs.

Mixed Economic Systems

Pure capitalism and communism are extremes; real-world economies fall somewhere between the two. The U.S. economy leans toward pure capitalism, but it uses government policies to promote economic stability and growth. Also, through policies and laws, the government transfers money to the poor, the unemployed, and the elderly or disabled. American capitalism has produced some very powerful organizations in the form of large corporations, such as General Motors and Microsoft. To protect smaller firms and entrepreneurs, the government has passed legislation that requires that the giants compete fairly against weaker competitors.

Canada, Sweden, and the UK, among others, are also called mixed economies ; that is, they use more than one economic system. Sometimes, the government is basically socialist and owns basic industries. In Canada, for example, the government owns the communications, transportation, and utilities industries, as well as some of the natural-resource industries. It also provides health care to its citizens. But most other activity is carried on by private enterprise, as in a capitalist system. In 2016, UK citizens voted for Britain to leave the European Union, a move that will take two or more years to finalize. It is too early to tell what impact the Brexit decision will have on the UK economy and other economies around the world.

The few factors of production owned by the government in a mixed economy include some public lands, the postal service, and some water resources. But the government is extensively involved in the economic system through taxing, spending, and welfare activities. The economy is also mixed in the sense that the country tries to achieve many social goals – income redistribution and retirement pensions, for example – that may not be attempted in purely capitalist systems.

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Economic System Essays (Examples)

1000+ documents containing “economic system” .

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Economic system of mexico mexico which is.

Economic System of Mexico Mexico, which is officially United Mexican States, is a country that is bordered by the United States, the Gulf of Mexico and the Caribbean Sea; elize and Guatemala; and the Pacific Ocean (Concise Columbia, 2000). The country's capital is Mexico City and its other main cities include Guadalajara, and Monterrey. Mexico's landscape is predominantly mountainous. While lowlands lie in the southeast and along the coasts, the heart of the country is the extensive Mexican plateau, with elevations generally above 4,000 feet. Mexico's government consists of an executive, legislative and judicial ranch. The executive branch is ruled by the president and must rule according to the law. The legislative branch is in charge of the making of laws, and discussing the countries problems with other countries. In Mexico, a new president is elected every six years by means of election. The current president is Vicente Fox. The president is the Supreme Commander….

Bibliography

The Concise Columbia Electronic Encyclopedia. Columbia University Press. 2000.

Mexico Economic Survey, OECD Paris, 1999.

Mexico's Historical Figures,  http://www.mexconnect.com/mex_/history/mexicopeople.html , Mexico Connect, 1996-2000.

Krauze, E. Mexico: Biography of Power. Rutgers, 1999.

Economic Systems Are Quite Complex

Plus, if the world is tied together economically, there is more impetus to prevent hyper-inflation, to help other countries in times of natural disaster, and to form a more humanitarian-based society. It seems that the idea of globalism was also assisted with new macro-trade agreements combine with the easy communications brought about because of the advances in cellular technology and the Internet. This rapid growth of the global economy affects modern economic development, stability, labor, and the environment in a dramatic way. Developing countries did not, in most cases, have the long tradition of the Industrial Revolution, so they are now trying to rapidly modernize; to build their economies in years or decades when it took the West centuries. This is in part due to the need for satisfaction of the populace, in part because of the way information is shared, and in part because on a regular basis,….

French Economic System Since 1981

The Fordist system is dependent on the mutual interaction of a group of economic and social mechanisms. It is based on four elements firstly, of a particular consumption pattern, influenced by the increasing amounts of consumption of standardized manufactured objects which is liable to be produced in large series. Secondly, it is characterized by the allurement of Taylorism as the principal model of industrial work organization in maintaining with the consumption pattern. Thirdly, there is a Fordist social compromise. Fourthly, a Keynesian-interventionist State both in the economic and social field ensured the coherence of the system by means of a high and steady growth rate. (Which French Third Way? Administrative and Social Empowerment: Lessons from the Second Left in Power) During the last three decades the system increasingly lost its consistency. Many elements of disturbance have been interacted weakening all the four elements. The weakening of Fordist coherence appropriately explains….

Adams, William James; Stoffa s, Christian. French Industrial Policy. The Brookings Institution. 1986. p. 13 Retrieved at  http://www.questia.com/PM.qst?a=o&d=34316320Accessed  on 18 June, 2005

Dirigisme. Retrieved at http://www.economicexpert.com/a/Dirigisme.htm. Accessed on 18 June, 2005

Economy of France. Retrieved at  http://www.economywatch.com/world_economy/france/ . Accessed on 18 June, 2005

Levy, Jonah. D. The State after Statism: French economic and social policy in the age of globalization. Paper prepared for presentation to the Thirteenth International Conference of Europeanists. Palmer House Hilton, Chicago, March 14-16, 2002. Retrieved at http://www.columbia.edu/cu/ces/conference2002/papers/h5_levy.doc. Accessed on 18 June, 2005

Socio-Economic System The Distributive Justice

awls is not against equality but he assumes that most socio-economic systems will allow for some inequities, and thus outlines his second principle to deal with those inequities. In this system, the state is powerful enough to provide security for its people on a basic level, but also strives to ensure that no class in society becomes so marginalized and disenfranchised economically that it becomes impossible for any person on the bottom rungs of society to engage in self-improvement. awls famously suggested that all societies should be created under what he calls a 'veil of ignorance,' or that rules and regulations should be constructed blindly when creating a society, without any knowledge of what the status of the decision-maker would be in the hypothetical world. In other words, when creating an ideal nation, would you be willing to live under the rules and conditions of the least-privileged members and regard….

Lamont, Julian & Christian Favor. "Distributive Justice." The Stanford Encyclopedia of Philosophy. 2007. [18 Nov 2011]  http://plato.stanford.edu/entries/justice-distributive/ 

Piccard, Dick. "A Theory of Justice." 2005. [18 Nov 2011]

 http://www.ohio.edu/people/piccard/entropy/rawls.html 

Storelli, Christopher. "John Rawls Theory of Justice." In M.P. Wolf and L. Musselman (eds.)

Religion Education or the Economic System

Sociology Sociological Perspective on Economics & Status The predominant and most widely practiced economic system in the United States of America is capitalism. Capitalism is heavily predicated on differences in status and class. The differences among individuals within a capitalist system can be more finely specified as imbalances. There are imbalances and there exists inequality among capitalist subjects. These imbalances and inequalities are naturally occurring functions of this economic system. The economic system in the United States can be used such that citizens may move "upward" socially, which typically is directly proportionate to the amount of material wealth. This system is additionally, and arguably primarily, used to trap others (numerous others) within lower status levels, which also correspond to lower economic status, class, etc. Capitalism in the United States is a powerful tool by which people make social movements or become restricted or otherwise limited socially. The social realm is not exclusively dependent….

References:

Andrews, Dan, & Leigh, Andrew. "More Inequality, Less Social Mobility." The Australian National University Centre for Economic Policy Research, Discussion Paper No. 566, 1 -- 15, 2008.

Granovetter, Mark. "The Impact of Social Structure on Economic Outcomes." The Journal of Economic Perspectives, Vol. 19, No. 1, 33 -- 50, 2005.

Tenets of the Capitalistic Economic System Is

tenets of the capitalistic economic system is that of supply and demand. In its most basic form, supply and demand is an economic model that determines both price and availability in a given market. In a competitive market, price functions in a way that is designed to equality the quantity demanded by consumers, and the quantity supplied by producers, resulting in economic "equilibrium" of price and quantity (Hazlitt, 1988). In the American healthcare model, managed care has attempted to control the supply and demand curve by modifying individual behavior. When this is focused on prescription drugs, however, demand-side controls involve copayment or coinsurance and may push the consumer towards generic brands. For the open market, however, major pharmaceutical companies posit that without adequate future revenue streams, they will be unable to develop new products in a robust manner -- especially in this highly regulated and competitive market (Kongstvedt, 2003). Part….

Russia Economic System and Scarcity

Country’s Economic System and Scarcity: Russia In previous eras, the name of Russia was synonymous with a very particular type of economic system, namely that of communism. After the end of communism, Russia adopted what was a thriving capitalist economy, buoyed in part by oil wealth. Still, Russia has attempted to pursue an independent financial policy, particularly given the considerable tensions which still exist between the nation and much of the industrialized world. It has not sought ties with many other nations, in contrast to the European Nation members. Currency woes, as the Russian ruble’s value has plummeted and inflation has increased, has led to shortages throughout the nation, including food shortages (Schearf, 2016). It might be assumed that this would generate pressure upon the government to take more aggressive action in support of its people or a more amicable attitude to the United States. But as Russia still effectively functions….

Socio-Economic System Determining What Is

Pain and pleasure are not part of awls' theory. ather, he centers his theory on the concept of justice. awls strongly argued that humans have the capacity for genuine toleration and respect for other humans. From this premise awls felt that true pluralism was possible and a tolerance for true democracy throughout the world community was possible. With so many different views circulating what is to provide stability in a society based upon the views of awls? What keeps anarchy from developing at any moment? According to awls, stability is provided through what he describes as an overlapping consensus (Love, 2003). Laws are developed that support the basis comprehensive doctrine but for differing reasons. Each citizen supports the same laws but for different reasons. Consensus is not necessarily a compromise but a balancing of interests. Each citizen is free to hold his or her own belief and the overlap between….

Sandel, M. (editor) (1984). Liberalism and its Critics. New York: NYU Press.

Love, N.S. (2003). Rawlsian Harmonies: Overlapping Consensus Symphony Orchestra. Theory, Culture & Society, 121-140.

Mill, J.S. (2008). On Liberty. New York: Bedfore / St. Martin's .

Rawls, J. (1999). A Theory of Justice. Cambridge, MA: Belknap Press of Harvard University Press.

Social Anthropology Economic Systems Generally

Animism is the concentration of those foundational powers within high-status members of social groups and is most common with clans and tribes. Monotheism evolved in the same manner whereas polytheism is more common within larger and more intellectually and economically sophisticated societies. 4. Kinship: The concept of family varies considerably among different types of societies. Kinship societies are unique in the degree to which the concept of family encompasses horizontal relations as well as vertical relations. The study of terminology is important precisely because similar phrases such as "family" and "kin" have such different connotations in different societies. Whereas kinship societies are typically endogamous, larger human societies are almost always exogamous and subscribe to strong cultural taboos prohibiting incest. Within kinship societies, endogamous rules apply only to vertical and immediate horizontal relations. 5. Applied Anthropology: Academic anthropology refers to the empirical study of human societies and to anthropological research. Generally, the primary purpose….

Irish Economics Economic Systems and

The economy is market-oriented, and highly technologically advanced. Primary sectors include petroleum, steel, motor vehicles, consumer goods, aerospace, and telecommunications (CIA the World Factbook, United States). Both Ireland and the United States have a high degree of economic freedom. The Heritage Foundation ranks Ireland as the world's 7th freest economy, with high levels of investment, financial, business, and property rights freedom. However, labor freedom is the weakest area for Ireland (Heritage Foundation, Ireland). The Heritage Foundation ranks the United States as the world's 4th freest economy. Interestingly, the Hertiage Foundation notes "America could do slightly better in fiscal freedom and freedom from government" (Heritage Foundation, United States), while Ireland has more freedom from government (Heritage Foundation, Ireland). eferences CIA the World Factbook. 2007. Ireland. https://www.cia.gov/cia/publications/factbook/print/ei.html CIA the World Factbook. 2007. United States. https://www.cia.gov/cia/publications/factbook/geos/us.html Heritage Foundation. 2007. Ireland. http://www.heritage.org/research/features/index/country.cfm?ID=Ireland Heritage Foundation. 2007. United States. http://www.heritage.org/research/features/index/country.cfm?ID=Unitedstates Commanding Heights, PBS. United Kingdom. http://www.pbs.org/wgbh/commandingheights/lo/countries/uk/uk_political.html.

CIA the World Factbook. 2007. Ireland. https://www.cia.gov/cia/publications/factbook/print/ei.html

CIA the World Factbook. 2007. United States. https://www.cia.gov/cia/publications/factbook/geos/us.html

Heritage Foundation. 2007. Ireland.  http://www.heritage.org/research/features/index/country.cfm?ID=Ireland 

Heritage Foundation. 2007. United States.  http://www.heritage.org/research/features/index/country.cfm?ID=Unitedstates

Economic Final Report

Economic Systems: An economic system is basically described as specific set of principles that addresses the production, distribution, and consumption of products and services. The involved parties in the production, distribution, and consumptions processes are usually determined by or dependent on the economic system. Throughout the history of humanity, different types of economic systems have evolved because different societies have placed varying emphasis on distinctive goals and priorities as part of their efforts to obtain answers to certain economic questions. In addition, the difference in economic systems is fueled by the tendency by different societies to develop very broad economic approaches to manage their resources. One of the main reasons for the development of different economic systems is to address the challenge of scarcity. The challenge of scarcity is an essential problem that confronts individuals and nations. hile there are four major types of economic systems recognized by economists, there are….

Works Cited:

"Economic Systems." Hilliard Bradley High School. Hilliard Bradley High School, n.d. Web. 18 Mar. 2013. .

"Factors of Production." Enotes.com - Study Smarter. Enotes.com, Inc., n.d. Web. 18 Mar. 2013. .

"Types of Economic Systems." Economic Systems. Shmoop University, Inc., n.d. Web. 18 Mar. 2013. .

Economic Final Report Types of economic systems Economic systems vary from one nation to another. Traditional economic systems refer to an economic system founded by tradition. The services and goods that people provide through the work they do, how people exchange and use the resources are trends that follow permanent patterns. These are not dynamic economic systems because there are minimal changes. In this economic system, people live on static standards. They do not enjoy much occupational mobility and financial mobility (Gregory and Robert 19). However, it is possible to predict economic relationships and behaviors. People are aware of what they are expected to do, why they trade, they know what others should give to them. In traditional economic systems, the interests of the community are of great priority than individual interests. People collaborate at work and labor proceeds are shared equally. However, in some traditional economic systems, individuals respect some personal….

Conklin, David W.; Comparative Economic Systems: Objectives, Decision Modes, and the Process of Choice. Cambridge [England: Cambridge University Press, 2009. Print.

Gregory, Paul R, and Robert C. Stuartl; Comparative Economic Systems. Boston: Houghton

Mifflin Co, 2010. Print.

Keese, Mark, Pete Richardson, and Ge-rard Salou. The Measurement of Output and Factors of Production for the Business Sector in OECD Countries: (the OECD Business Sector Database). Paris: OECD, 2011. Print.

Economic Crisis Policies US Current Economic Crisis

Economic Crisis Policies US current economic crisis is considered to be started from real estate sector. The real sector started to decline in 2006 and it accelerated in 2007 and 2008. Housing prices have fallen from the peak from about 25% so far. The decline in prices left homeowners with no option and they were unable to refinance their mortgages and causes default of mortgages. This default of mortgages and loans swallowed the banks and financial markets such as falling of Lehman's brothers and other anks and blow to rest of economy happened as the whole economy was relying on banks and ultimately it slows down investment in the country and capital flows to other parts of the world like China and India. ank losses cause reduction of bank capital which in turn requires capital reduction thus saving bank from lending. It is estimated that every $100 loss and reduction of….

ISR international socialist review. (2009, april). Retrieved from The U.S. economic crisis:causes and solutions:  http://www.isreview.org/issues/64/feat-moseley.shtml 

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Eyes on wall street. (2011, april). Retrieved from Levin coburn investigates casues of financial crisis:  http://www.eyesonwallstreet.com/2011/04/articles/financial-crisis/levincoburn-report-investigates-causes-of-the-financial-crisis/ 

Rude, C. (2009). World Economic Crisis and Fed Reserve Response to it. Studies in Political Economy.

Economic Advisor to a Less-Developed

The nation will enforce law and order to protect its public property, regulate monetary frameworks and correct market failures. The government will be responsible for protecting private life of its citizens and property (Grant & Vidler, 2000). Market and Competition Forces: the country's economy should be designed in such a way that it will promote competition. This is because competition means a fair deal in obtaining results. The government should increase sellers and buyers in the market because this would promote competition thus increasing the quality and efficiency. With competition, the country will be able to control and manage different functions of its economy (Grant & Vidler, 2000). Demand and supply are the prime market forces determining the production of a country produces and the suitable ways to do so. Market equilibrium, price and output, are determined by market forces. Therefore, I would recommend that any least developed nation to emphasize….

Bahl, Roy, W. (2008). Land taxes vs. property taxes in developing countries. Cambridge,

MA: Lincoln Institute of Land Policy.

Grant, S. & Vidler, C. (2000). Economics in Context. New York: Heinemann.

Hyman, D.N. (2011). Public finance: A contemporary application of theory to policy (10th ed.).

Economic and Trade Development the

(Buchanan, 72) The economic policy tools that were employed just after the war subsequently underwent some changes. From 1947 to 1950 direct controls on wages and distribution were eliminated followed by removal of trade controls in 1958. However, the government continued to maintain its hold over prices and credit distribution which made it different from many of its neighboring states in the postwar period. The French Ministry of Finance exerted greater control over the economy than the Bank of France. This led to a greater predilection to resort to devaluation when external equilibrium resulted due to the state failure to control incomes. In France, the period between 1945 and 1975 was known as the "thirty glorious years" because of the phenomenal economic performance. During this period, the average growth rate of GDP was around 6.8% which was quite remarkable considering that Britain's average GDP growth rate was 2.4% and Germany's….

Bathelt, Harald; Wiseman, Clare; Zakrzewski, Guido. Unit 1: Post-war development and structure of the German economy.

Buchanan, Tom. Europe's troubled peace, 1945-2000.

Wiley-Blackwell, 2006.

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Economic Systems, Markets and Politics pp 419–431 Cite as

Final Conclusion: Economic Systems, Markets and Politics

• Christian A. Conrad 2  
• First Online: 05 January 2023

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The economics, with their focus on a pure objective utility maximization, are far from human reality. Economic sciences are exclusively individually oriented. People decide in a social environment, which is why sociology is at least as important for behavior as psychology. The influence of the group (the company) or society must also be taken into account. All modern societies have institutions and organizations, giving them order, and instilling discipline in their citizens to behave in the manner socially desired. Norms, values and morality are important here, including attitudes towards the political and economic system. The attitudes of people in a society to the economically relevant activities have been paid as little attention by economic science as the existence of general economic knowledge.

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See Kydland and Prescott ( 1977 ).

Kydland, F. E., & Prescott, E. C. (1977). Rules rather than discretion: The inconsistency of optimal plans. Journal of Political Economy, 85 (3), 473–491.

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Introduction

The manner in which each individual live in a society depends on how a country handles questions and problems concerning their economy. These issues involve dealing with consumer needs, inflation, and recession just to mention a few. When dealing with economic issues, three basic questions come into mind involving the type of goods to be produced using the available resources, the method of production, and the market for these goods. The way of handling these questions is based on the economic system of a country. As such, an economic system refers to the way in which the resources of a country are allocated to produce goods and services, and the manner in which these services and goods are distributed to the consumers. There are four different types of economic systems, including traditional economy, free market/capitalism economy, planned/socialist/command economy, and mixed economy. Each type of economic system has its distinct features regarding functions, characteristics, and the role of the government in each economic system.

Traditional Economy

A traditional economy refers to a system where customs, traditions, and beliefs and inheritance determine the answer to the three economic questions. Commonly referred to as subsistence economy, a traditional economy is defined by trading and bartering (Sullivan, 2009). Under such economic system, little is produced and in any cases of surplus, they are typically donated to the landowner or the ruling authority. Traditional economies do not use modern technology in the production of goods and services. The main tasks of workers in a traditional economy include hunting, gathering, and cultivation. There many parts of the world that continue to operate in traditional economies, primarily in developing countries with large indigenous populations. Examples of traditional economies include the Australian aboriginals, the Mbuti in Central Africa, and Amazon tribes. In most cases, traditional economies do not have official currency, with any available wealth going to the upper class. Traditional economies can morph into a mixed, command, or market economy due as influences from neighboring countries permeate the economy. One advantage of a traditional economy is that each member of the society has a role to play. This typically results into strong social networks, as people feel more unified with the society, while increasing a sense of worth. Additionally, because goods and services are only made for survival, the natural resources of the country may not be compromised as in other types of economies. The disadvantage of traditional economy is that individuals have set roles and lack the ability to accumulate wealth. Undeniably, most people who live in this type of economy remain in poverty for their entire life. According to Hart (2007), about four billion people may exist in traditional economies. The basic economic in a traditional economy are answered by past experience and practices. The roles of individuals are defined by the customs of elders and ancestors. The custom of collaborating and sharing for the benefit of the society defines a traditional economy.

Market Economy

In a market economy, the private sector (private firms and individuals) answer the three basic economic questions. It is an economic system in which the three economic questions are answered by the interplay of demand and supply in free markets, with no government interference through rationing, price-fixing, and other coercive mechanisms. The government plays a limited role in the economy, with emphasis on freedom of the individual consumers and producers. In theory, no government interference can be found in this system, but in reality, governments regulate and legislate economic systems. In a market economy, price mechanism determines prices. Under this economic system, only the most efficient method of production is employed, and the production of goods and services takes place where labor is cheapest. There is no real life example of a purely free market economy. In the late nineteenth century, the United States was about close to becoming a pure market economy. In his book, The Wealth of Nations, Adam Smith asserts that there is limited but important role for governments to play in our economy (Zhou, 2011). The role of the government in market economy is to guarantee fluidity and complete functioning of the world of business. Under this type of economy, the government plays a significant role in providing a legal system to make and enforce laws and regulations to protect private property rights. The government also plays a significant role in providing public goods that individuals or private businesses would not provide. Additionally, government may come in to correct market failures such as external costs and economic slowdowns. The government also plays a significant role in maintaining competition by regulating monopolies. This is because competition among sellers ensures fair market prices and wide variety of products and services at fair prices. The government can also redistribute income by taxing people earning larger incomes to help the poor.

Command Economy

Command economy is a type of economic system where supply and demand are regulated by the government rather than market mechanism (Orr, 2011). Economic agents in a controlled economy, particularly producers operate primarily under specific directives from the government or the highest administrative authority, as in the former Soviet Union, Cuba, and China. A command economy does not take into account mutual interest and agreement between parties. As the name implies, command economy orders the affairs of a nation through coercion. The former Soviet Union, China, and Cuba dismantled their planned economies from 1990. North Korea practices this type of economic system to present day. The main advantage of this economy is that it takes the welfare of all citizens as the primary goal. It also ensures employments of all available resources. The government has the information required to direct resources where they are most needed. Under controlled economy, wasteful competition and industrial unrest such striking are avoided because the government controls wages. The downfall of this economic system is the lack of economic freedom for producers and consumers. This results into lack of incentives and low morale among workers due to rigidity of the system. There is no equal distribution of wealth and income in a command economy. The production is for need rather than profit, which demoralizes the producers. In a command economy, the government controls all aspects of the economy with those on the top of the hierarchy giving economic commands to those further down the ladder. The government plans what to produce, how to produce it, and prices. The government also sets wages for all its citizens. The government employee most of the workers and determines how they do their jobs. The government organizes, plans, and coordinates the whole production process in all industries.

Mixed Economy

A mixed economy is an economic system that incorporates some government involvement into a market economy (Rosefielde, 2008). Most modern economies incorporate the elements of both centrally planned economies and market economies. This is due to the limitations that arise from the aforementioned systems. In countries such as Sweden where the government plays significant economic role in social provision, taxes will be higher and distribution of wealth and income more equal. Conversely, in countries such as the U. S. where the private sector plays the most significant economic role, social provision and taxes will be lower and the distribution of income and wealth less equal (Duignan, 2013). The government allocates some of the resources while the rat by the market mechanism. The public sector holds the responsibility of supplying public goods and service, and amenities. These goods and services are provided to all citizens for free and paid by taxes, for example healthcare, roads, street lights, and police services. The local or the central government makes decision regarding allocation of resources. The state owns large proportion of production factors in the public sector. The private sector is responsible for meeting the needs and wants of consumers. The government or state can intervene in areas of the economy through passing laws and legislation to protect citizens from unfair trading practices. In a mixed economy, the government functions as a guide or reference in economic activities by intervening through regulating policies of industries. In order to adequately meet the demands of their citizens, government have adopted mixed economy to try to provide for both consumer and national interests.

Bibliography:

Duignan, B., 2013. Economics and economic systems. New York: The Rosen Publishing Group Hart, S. L., 2007. Capitalism at the crossroads: Aligning business, earth, and humanity. 2nd ed. New Jersey: Pearson Prentice Hall. Orr, T., 2011. Understanding economic systems. New York: The Rosen Publishing Group. Rosefielde, S., 2008. Comparative economic systems: culture, wealth, and power in the 21st century. New Jersey: John Wiley & Sons. Sullivan, L. E., 2009. Economic system. California: Sage Publications, Inc Zhou, H 2011, 'Economic Systems and Economic Growth', Atlantic Economic Journal, 39, 3, pp. 217-229, EconLit with Full Text, EBSCOhost, viewed 10 June 2013.

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The Economic Trend of the United States Essay

Economy can be defined as the wealth and resources of a community,especially in terms of production and consumption of goods and services. Currently, the United States is the leading super power in the world and it acts as a role model to other states. The economic trend in the United States influences the economic status of the whole world.

This is to say, the economic status in the United States reflects the economic situation in the whole world. At the moment, there is a slight improvement in the United States’ economy. Even with these improvements, it is still not where it had been anticipated before the whole world went through a great depression (Economic outlook, 2012).

Over 100,000 jobs have been created in the past seven months by the U.S. economy. However, it still remains halfway below the set bar of 200,000. Jobs stipulated to bring down the rate of unemployment remained at 8.2 percent in the month of March. This has been a major obstacle in re-electing president Barrack Obama among other fiscal matters.

There has been a slight growth in consumption levels, Gross Domestic Product and income levels in the U.S., but this slight growth is not what was expected. The housing mortgage market is still dead, one of the major contributors of the bad American economy. The Federal Reserve has continued to stimulate oil prices by reducing the interest rates to almost zero and quantitative ease but to no avail.

In the fiscal year 2012/2013, even though weak, the U.S. economy has recorded a positive growth rate of 2 percent in its Gross Domestic Product (World Financial Watch, 2013).

Consumption in households has continued to be a major point to be pondered. Consumption households in the U.S. indicated an increase in the year 2012 and the beginning of 2013 because of the additional jobs created and the stimuli of fiscal policies which put it at an additional gain of +2.2 percent in the fiscal year 2011. In this period of 2011 and early 2012, a lower spending rate was recorded of +1.4 percent because people could not afford luxuries.

They could not afford to go for vacations and host extra visitors. This is low as compared to the previous 3.3 percent on average that was recorded in the earlier years. This can be blamed on the high unemployment rates, but mostly on the low personal income which is disposable because of the increase in taxes at 0.6 percent year after year.

This has also been contributed largely by the acute and steady increase in gasoline prices. To cover up for this consumption, many consumers have continued to borrow through automatic loans, credit cards, consumer loans, corporate junk boards and the commercial real estates. The credits being taken by the consumers have gone up by fifteen, in the past sixteen, months making it just three points before it reaches eighteen as recorded in August 2008 (Economic Outlook, 2012).

There have been small forms of development in investment areas in the U.S., insolvencies are on the other hand falling. Businesses that are investing in software and other equipment are rising up and have recovered from their losses and this has continued for the greater portion of the year 2012 and is continuing in the year 2013.

This is possible because they are being sustained by the restoration of good health shown by the businesses which have had considerable cash liquidities, thereby presenting them with an opportunity to borrow at affordable interest rates, for example, the commercial banks.

On the other hand, businesses involved in construction have continued to suffer greatly from the housing state markets like the subprime mortgages with starts of housing permits to be at seventy percent, a rate that is lower compared to the 2006 rate, which was higher even though this rose slightly for some few months. In the light of this, bankruptcy in businesses declined for the fourth round in the year 2011, seventh straight quarter and is still feared to fall by 10 percent in the fiscal year 2012 (Moseley, 2009).

The fiscal policy is currently facing turmoil. President Barrack Obama recently presented his budget for the 2013 fiscal year, and would most likely raise the deficit instead of increasing the value of the economy. Republicans also presented a budget that countered Obama’s budget, indicating that it would reform entitlements and cut on government spending.

Unfortunately, none of the two budgets presented by the two parties passed the test of solving the poor economy. Serious matters regarding the economy were expected to come up, because one,- the tax that was reduced during President George W. Bush regime and the reduced payroll were meant to be phased out as in the case of benefits in joblessness reduction as well as the cut in budget sequences that must increase.

Secondly, the goal that was set might have been too low and would have had to bet set higher. Thirdly, the presidential elections are more likely to focus on the U.S. nation’s finances and the U.S. economy. Meanwhile, since World War II, no president has ever been put back on the presidential sit with a high rate of unemployment as it has been seen recently (World Financial Watch, 2013)

The monetary policy in America is facing up but the third round of easing quantitatively is quiet an unreachable ambition. Benarke, a chairman at the Federal Reserve, has been increasingly thorough in his assessment of the of the U.S. economy currently resulting in the increase of the treasury yields. He however continues to work hard and to do whatever it takes to lower the interest rates to zero. He plans to go on with his strategies till the end of the fiscal year 2014.

This is a situation that seems so impossible that the rest of the people in the federal sector wonder if it is achievable and workable for a better future. Reduction in the interest rates has led to the weakening of the dollar. Benarke still believes in the QE3 (a third round of quantitative easing).

According to him, risking another round of recession is too dangerous. It is a sharp rise in the oil prices that would most likely lead to the third round of quantitative easing without which there could be no QE3. Reduction in unemployment and the growth of the economy would make a third round of quantitative easing not necessary because there would be no exaggerated inflation rates in the future (Economic Outlook, 2012).

External trade in the USA still remains at a big loss. The growth impulse obtained fromexternal or foreign trade was only for a shorter period of time recorded to be positive. This was only seen in 2011. From 2012 onwards, it has been seen to be negative. Meanwhile, thecurrent account balances and trade balance are at a risk of being strongly being deficit. This is likely so because of one, America mainly demands for its imports from Japan, Europe and china.

Secondly, it is the weaknesses experienced in these economies, Japan, China and Europe, that are widening the economic gap in America. Thirdly, the constant increasing oil prices have contributed largely to the shortage with the oil producing nations (OPEC). America imports comprises of food products like fish from Japan as well as some makes of vehicles from Japan, china and Europe. It tends to overlook other states.

Any problem experienced by any of these states will also be experienced by America. It is wise that America has a wide variety in terms of where to source for its products. It should instead focus on expanding its scope and import from other states that might be more convenient in terms of prices and continued production. The continuous changing oil prices also have contributed to the poor economy not just in America but worldwide. A solution should be put in place to be able to stabilize prices (Economic Outlook, 2012).

America has experienced a decline in the profit rates. This has also been a major reason to the fall of the U.S. economy. This happened in the 1950s all through to the 1970 where the profit declined almost to 50 percent which was at 22 percent and went down to 12 percent.

Even though there has been a slight improvement, it is still the case in the year 2013. This is mostly reflected in the capitalist states because they are all dependent in America. According to Marxist theory, it has resulted in the high rate of unemployment, high rate of inflation and consequently, low wages resulting in low investments. People can no longer invest because they have no money for investments.

This is the reason for the slow growth rate. The U.S. government is putting in much effort to reduce the unemployment rate by implementing monetary policies like the reduction in government spending, controlled interestrates and controlled taxes. Organizations have put in insolvency approaches to cut wagesfor them to continue working, negotiating their arrears and consider union agreements invalid (Economic Outlook, 2012).

Even though America has been seen to grow in its economy, a lot still needs to be done to see it achieve the best economy. This is important because its economy is a mirror to the rest of the capitalist’s states in the whole world. A bad economy has a bad impact on its people.

This can be seen in the expensive health care that the common citizen cannot afford, the poor living standards seen by the poor housing and lack of basic needs like food, shelter and proper clothing. A poor economy has its people exhausted and stressed up at the work place because they are not motivated. America has to come up with various approaches that will see the continent grow as a whole and not just individually. This can also be achieved if fair and proper policies are put in place (William, 2011).

Economic Outlook. (2012). Economic outlook as of May 2012 . Retrieved from www.eulerhemes.us/eu/economic-research.html.

Moseley, F. (2009). Us economic crisis: Causes and solutions. ISR. 64 . Retrieved from www.isreview.org/issues/64/feat-moseley-shmtl.

William, M. A. (2011). Economics: A Contemporary introduction (9 th Ed.). New York: South Western College.

World Financial Watch. (2013, April 13). World financial watch . Retrieved from www.worldfinanacialwatch.com/us-economy/the -current-state-of-us-economy.

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IvyPanda. (2019, May 7). The Economic Trend of the United States. https://ivypanda.com/essays/us-economy/

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Essay On Economic Systems

An economic system is a system for producing, distributing and consuming goods and services, including the combination of the various institutions, agencies, consumers, entities (or even sectors as described by some authors) that comprise the economic structure of a given society or community. It also includes how these various agencies and institutions are linked to one another, how information flows between them, and the social relations within the system (including property rights and the structure of management).

It is an organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economic system is comprised of the various processes of organizing and motivating labor, producing, distributing, and circulating of the fruits of human labor, including products and services, consumer goods, machines, tools, and other technology used as inputs to future production, and the infrastructure within and through which production, distribution, and circulation occurs.

These processes are determined by the political, cultural, and environmental conditions within which they come to exist. The economic system involves investments, production, the allocation of economic inputs, distribution of economic outputs, land availability, households (earnings and expenditure consumption of goods and services in an economy), financial institutions and government policies. It involves a set of institutions and their various social relations.

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Alternatively, it is the set of principles by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources. An economic system is composed of people, institutions, rules, ND relationships, for example, the convention of property, the institution of government, or the employee-employer relationship. Today the dominant form of economic organization at the global level is based on capitalist mixed economies. Societies have developed different broad economic approaches to manage their resources.

Economists generally recognize four basic types of economic systems? traditional, command, market, and mixed. A traditional economic system is shaped by tradition. The work that people do, the goods and services they provide, how they use and exchange resource, etc. , all tend to follow long-established patterns. These economic systems are not very dynamic? things don't change very much. Standards of living are static; individuals don't enjoy much financial or occupational mobility.

But economic behaviors and relationships Economic Systems By Lillian what to expect from others. In many traditional economies, community interests take precedence over the individual. Individuals may be expected to combine their efforts and share equally in the proceeds of their labor. In other traditional economies, some sort of private property is respected, but it is restrained by a strong set of obligations that individuals owe to their community. No general rule exists for determining who has power within a group of people connected by kinship relationships.

However, patriarchy, age, and birth order often play a role in determining status among those living within a particular kinship production unit. In particular, it is often the case that if one is male, if one is older, and if one is the first born to someone who currently has a position of power, then one is more likely to achieve greater power within the family and, so, within the economy in kinship production. In traditional economic system the "economy' is not a separate sphere of society that operates according to its own logic.

Instead, economic activities are subordinated to power relationships, customs, and traditions that developed within the group of people connected by kinship connections. The other aspects of family life?child rearing, networks of loving relationships, religious beliefs, and so on?are not necessarily subordinated to the economic aspects of family production. Indeed, these other aspects can dominate the economic aspects of family life. Through most of history, traditional economic systems aimed to achieve survival of the kinship group.

That is, production within this economic system aimed to meet the Asia needs for food, shelter, and clothing by the production of all these things within the production unit. Most often, the production unit did not rely on outsiders for the production of basic needs. Further, through most of history notions of earning a profit were foreign to this economic system. Production was for use within the family rather than for sale to outsiders make a profit. Exchange?or trade?is generally unimportant within the kinship production unit.

Goods and services are transferred among members of the production unit, but most of these transfers are not classified as exchanges. For instance, many transfers are best seen as gifts made not with the intent of getting something in return but because of family obligation or, indeed, love. Sometimes "reciprocal exchange" does occur, in which what is given today creates a social obligation by the recipient to provide something back to the giver in the future. These gifts and reciprocal exchanges, however, are not necessary parts of the traditional economic.

Today you can find traditional economic systems at work among Australian aborigines, Intuit or those of the tea plantations in south India, and some isolated tribes in the Amazon. In the past, they could be found everywhere?in the feudal In a command economic system or planned economy, the government controls the economy. The state decides how to use and distribute resources. The government regulates prices and wages; it may even determine what sorts of work individuals do. Socialism is a type of command economic system.

Historically, the government has assumed varying degrees of control over the economy in socialist countries. In some, only major industries have been subjected to government management; in others, the government has exercised far more extensive control over the economy. A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency. A planned economy may be based on either centralized or decentralized forms of economic planning, but usually refers to a centrally-planned economy.

The goal of central planning is to enable planners to take advantage of more perfect information through a consolidation of economic resources when making decisions regarding investment and the allocation of economic inputs within production. In an entirely centrally-planned economy, a universal survey of human needs and consumer wants is required before a comprehensive plan for production can be formulated. The public body responsible for production and resource allocation would require the power to allocate factors of production in order to fulfill the plan, and for overseeing the distribution system of the economy.

The most extensive form of a planned economy is referred to as a command economy, centrally planned economy, or command and control economy. In such economies, central economic planning by the state or government directs all major sectors of the economy and roommates decisions about the use of economic inputs and the means of production. Planners would decide what would be produced and would direct lower-level enterprises and ministries to produce those goods in accordance with national and social objectives.

Planned economies are held in contrast to unplanned economies, such as the market economy and proposed self-managed economy, where production, distribution, pricing, and investment decisions are made by autonomous firms based upon their individual interests rather than upon a macroeconomic plan. Less extensive forms of planned economies include those that use indicative landing as components of a market-based or mixed economy, in which the state employs "influence, subsidies, grants, and taxes, but does not compel. Advantages The government can harness land, labor, and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without asses when the government forced the share of GNP dedicated to private institution from eighty percent to fifty percent.

As a result, the Soviet Union experienced massive growth in heavy industry. Disadvantages of economic planning Inefficient resource distribution: surplus and shortage. Critics of planned economies argue that planners cannot detect consumer preferences, shortages, and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). This difficulty was notably written about by economists Ludwig von Misses and Frederica Hayes, both of whom called it the economic calculation problem".

These opponents of central planning argue that the only way to determine what society actually wants is by allowing private enterprise to use their resources in competing to meet the needs of consumers, rather those taking resources away and allowing government to direct investment without responding to market signals. According to Tabor R. Mach, "Without a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals. "

Suppression of economic democracy and self-management Economist Robin Hannah notes that, even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and Just than mainstream notions of economic freedom. Says Hannah, "Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better.

But they could never have delivered economic self- management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways.

But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power. " The classic (failed) example of a command economy was the communist Soviet Union. The collapse of the communist bloc in the late asses led to the demise of many Belabors, and Burma continues to hold on to its planned economy even today.

A market economy is an economy in which decisions regarding investment, production and distribution are based on supply and demand, and the prices of goods and services are determined in a free price system. This is contrasted with a landed economy, where investment and production decisions are embodied in a plan of production. Market economies can range from hypothetical laissez-fairer and free market variants, to regulated markets and interventionist variants. Most existing market economies include a degree of economic planning or state-directed activity, and are thus classified as mixed economies.

In the real world, market economies do not exist in pure form, as societies and governments regulate them to varying degrees rather than allow full self-regulation by market forces. The term free-market economy is sometimes used synonymously tit market economy, but, as Ludwig Reheard once pointed out, this does not preclude an economy from providing various social welfare programs such as unemployment benefits, as in the case of the social market economy. In market economies, economic decisions are made by individuals.

The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resources?what training to pursue, what Jobs to take, what goods or services to produce. And individuals decide what to consume. Within a pure market economy the government is entirely absent from economic affairs. A market economy is a system where the market is believed to be crucial. Demand creates supply and the market largely finds its own level and is self-regulating.

The state adopts a laissez-fairer approach and gets involved as little as possible. Shareholders and private companies are the powerhouses of the economy. In its pure form, this system would be extreme with, for instance, little or no state help for people who are unemployed or homeless. In market economy two primary classes exist: "employees" and "employers. Employees (also called "workers") are the subordinate class. They are the direct producers who generate the surplus that goes to the employers. They often have little power in the social and political world.

Employers (also called "capitalists") are the dominant class: they receive the surplus and decide what to do with it. Employers are both the dominant class in the economy. They are also generally dominant in social and political matters within their country. Market economy exists when an economic system meets all four of the following criteria: Products are produced as commodities, Ђ Private ownership of capital goods used in production exists and is narrowly distributed in the population, and Wage labor is used in production.

In market system, products are made only if they bring profit to the owner of the firm. If buyers need a product, but the owner does not earn the profit he desires, the firm will not sell the good. A profit is earned if the revenue from selling these commodities is greater than the wages paid and the cost of materials and machinery used up. This profit is surplus: it is what workers produce above and beyond that necessary to pay their wages. Thus, the worker-capitalist relationship is a class relationship.

In market system, the capital goods (machines, buildings, tools) are owned by capitalists. The proportion of the population in a capitalist economy who has meaningful control over the economy's capital goods is small. Although indirect ownership of capital goods (via ownership of stocks and/or mutual funds) might appear to be relatively widespread, very few people in society are able to live off their ownership of capital goods. Most people in a market system economy can survive only by engaging in wage labor.

Wage labor is also called the "employer-employee legislations. " It exists when direct producers own themselves (unlike in slavery) but hire themselves out to capitalists in order to earn a wage or salary. Employees do not have sufficient access to income apart from employment to allow them to live even modestly?employees are not independently wealthy. Once employed, the employee enters a place of work in which the employer has almost all the power. The employer has almost one-sided power within the firm.

The only limits are those set by labor contracts (if one exists within the firm) or by law (which places few limits on the actions of business owners). Robin Hannah and Michael Albert claim that "markets inherently produce class division. " Albert states that even if everyone started out with a balanced Job complex (doing a mix of roles of varying creativity, responsibility and empowerment) in a market economy, class divisions would arise. The United States in the late nineteenth century was about as close as we've seen to a pure market economy in modern practice.

A mixed economic system combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources. Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, and many mixed economies feature a variety of government-run enterprises and governmental provision of public goods. Ender private ownership; that markets remain the dominant form of economic coordination; and that profit-seeking enterprises and the accumulation of capital main the fundamental driving force behind economic activity. However, unlike a free-market economy, the government would wield considerable indirect influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism's tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare.

Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors. There is not one single definition for a mixed economy, but the definitions always involve a degree of private economic freedom mixed with a degree of government regulation of markets. The relative strength or weakness of each component in the national economy can vary greatly between countries.

The term is also used to describe the economies of countries which are referred to as welfare states, such as the Nordic countries. Governments in mixed economies often provide environmental protection, maintenance of employment standards, a standardized welfare system, and maintenance of competition. As an economic ideal, mixed economies are supported by people of various political recursions, typically centre-left and centre-right, such as social democrats or Christian democrats.

Mixed economies were also promoted by fascists in the form of corporatism, involving a tripartite arrangement between labor, business and the state for the purposes of diminishing class-conflict and unifying the national economy through class collaboration for the purposes of national unity. Supporters view mixed economies as a compromise between state socialism and free-market capitalism that is superior in net effect to either of those. A mixed economy is a more common economic system. It is where the market economy is given a fairly free rein, but the government will intervene sometimes in some areas.

So, some elements of the economy will be managed, and there will be some regulation of the excesses of the market. The state will intervene in specific areas, such as health, safety and employment law. A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics.

The term mixed economy is used to describe economic systems which stray from the ideals of either the market, or various planned economies, and "mix" with elements of each other. As most political-economic ideologies are defined in an idealized sense, what is described rarely if ever exists in practice. Most would not consider it unreasonable to label an economy that, while not being a perfect representation, However, when a system in question diverges to a significant extent from an idealized economic model or ideology, the task of identifying it can become problematic.

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