Economic Systems

Economic Systems

1. Capitalism

   • Capitalism is a Free Market profit driven system where production is privately owned. Business owners are free to determine, what to charge consumers, how to pay workers and where to manufacture their chosen products.
   • State Capitalism
     • The Government Maintains some control in conjunction with a freer market system
   • The Foundations of Capitalism
     • The Right to Own Private Property
     • The Right to Own a Business and Keep All of It's Profit
     • The Right to Freedom of Competition
     • The Right to Freedom of Choice
   • Free Market System
     • Supply
       • The number of products owners and manufacturers are will to sell at a given time
     • DEMAND
       • The number of products consumers are willing to purchase at a given time
     • Market Price
       • A combination of Supply and Demand statistics will determine the product's Market Price
   • PRO's
     • Capitalism provides the freedom necessary for businesses to thrive and produce individual wealth as well as community wealth.
     • The Free Market of Capitalism allows the buyers and sellers to determine the needs allowing a successful market to thrive and grow.
     • Capitalism will create the “Invisible Hand” phenomenon. Individual wealth driven entrepeneurs will eventually aid socially and communally by creating jobs and producing products/technology that benefit others.
     • CONS
       • An individual wealth/benefit driven economy can lead to significant income, wealth and class separation among society. Entrepreneurs may become extremely wealthy while employees and non business owning workers earn an average salary and remain amongst the middle class or low income spectrum of the scale. This produces a moral dilemma within society.
   • UNITED STATES of AMERICA
     • Capitalism
       • The Unites States of America is a Capitalist Economy where all citizens have the freedom and rights to invent, create and establish their own business.
     • Mixed Economy
       • In recent years the Government has created many social programs to help the less fortunate. These programs are funded with tax payer dollars collected from both the Individual and Businesses alike. With the creation of these systems the USA is now seeing what can be lightly recognized as a Mixed Economy. Capitalism with traces of Socialism.

2. Socialism

   • Socialism is an economic system based on the belief that the government should own and control business while providing at no cost many of its citizens needs such as education and health care. Distribution of wealth is controlled by the government.
   • PROS
     • Social Equality
       • The government taxes the wealthy and redistributes it to the poor while providing free social programs
   • CONS
     • Inequality
       • More inequality is created because there is no incentive to create and gain through labor and achievement.
     • Brain Drain
       • When the educated productive members of the economy are successful, most of their income is seized through taxes so they flee the country looking for a place where they can advance economically.
   • VENEZUELA
     • Socialist principles have led to the fall of what was once one of the richest South American Nations. In the past year alone Venezuelans have lost an average of 20 pounds to due food shortages. There is no industry and next to zero jobs available.

3. Communism

   • CONS
     • Without free market prices to project demand, the government fails to produce needed goods and supplies resulting in major shortages and chaos.
   • PROS
     • Communism may allow for a very low tax rate on its citizens.
   • An Economic and political system where the government owns roughly 100% of industry and has almost an equal amount over its citizen’s lives.
   • N. KOREA
     • As a result of the communist dictatorship in N Korea, its citizens are starving and have no hope for their futures. Health Care is scarce; the people live in fear of their government and try to flee south when possible.

4. Importance of and Economic System

   • Society needs a system to produce and distribute goods so that its member’s needs are met while providing a path towards comfort peace and prosperity. A thriving economic condition allows invention, advancement and opportunity to obtain wealth.