Economic Systems

Economic Systems

1. Capitalism

   • Definition of Capitalism
     • capitalism is an economic system where private entities own the factors of production.
       • pros and cons of Capitalism
         • Capitalism encourages innovation, it is a society that is based on services of others, it promotes equality, provides freedom, promotes self-regulation, and embraces a smaller world.
         • Capitalism creates an economy that is based on consumption, it places the needs of the business above the needs of the individual, equal opportunities can be brief and fleeting, people with an inability to be productive are left behind, even when workers are needed there is no incentive to pay them fairly.
   • Examples of Capitalism
     • capitalist society is one that supremely values private property rights, the enforcement of contracts and voluntary exchange. A few Capitalist countries are New Zealand, Chile, Sweden, and Georgia to name a few.

2. Communism

   • Definition of Communism
     • Communism is an economic system where the collective owns all property which includes the four factors of production. Labor, entrepreneurship, capital goods, and natural resources.
   • pros and cons of Communism
     • The good thing about communism is that everyone is equal and no one is left alone. It makes health care, education, and employment accessible to citizens and it does not allow business monopolies.
     • some cons would be that it hampers personal growth, too controlling on the lives of the people. It dictates on people, it does not give financial freedom. As opposed to a free market economy, the command economy which is practiced by most communist countries ties the hands of business people.
   • Examples of Communism
     • In 1948, North Korea became a communist country. After the Indochina War Vietnam became divided. Other communist countries would be Cuba, china, and Laos just to name a few.

3. Mixed Economy

   • Definition of Mixed Economy
     • A mixed Economy is defined as a system blending elements of planned economies, free markets with state interventionism, or private enterprise with public enterprise.
   • Pros and cons of Mixed Economy
     • Goods and services are distributed to where they are needed. It allows prices to measure supply and demand. It rewards the most efficient producers with the highest profit.
     • If the market has to much freedom it can leave the less competitive members of society without any support from the government. Central planning of government industries can also create problems. The defense industry could just so happen become a government subsidized monopoly or oligarchy system which can put the country in debt.
   • Examples of Mixed Economy
     • Mixed Economy is one where there are both government owned businesses and private owned businesses. Majority of the countries are mixed economies. Such as England, USA, Canada, and India.

4. Socialism

   • Definition of Socialism
     • Socialism is an economic system where everyone in the society equally owns the factors of production. The ownership is acquired through a democratically elected government.
   • Pros and cons of Socialism
     • Every citizen will have access to education and health care, it results to classless society, it allows for balance in wealth and earnings, it eradicates monopolies in corporations.
     • It gives the government much if not full control, it demands higher taxes, the rights of workers might be too much, people have to deal with bureaucracy, it can result to lack of Motivation.
   • Examples of Socialism
     • The former Soviet union is an example of Socialist Economy. Cuba would be an example of a socialist nation. It's economy is state run and it lacks a stock exchange.