Economic Systems

Economic Systems

1. Communist Economy

   • A communist economy is controlled fully by the government. The economic and political decisions are fully made by the government and the people do not have a say in it. The government is not only involved in their peoples economic and political decision but also other decisions that affects the lives of their citizens. An example of this economy is North Korea.
     • The only advantage of a communist economy is that the government wants to provide equality, so healthcare and education is free for their people.
     • The disadvantages to a communist economy are endless. The people do not have a say or choice in anything in their government. The government chooses everything for them including their religious practices. There are no incentive programs for the people and the government controls the market place.
     • The communist economy is the only economic system that is controlled fully by the government. There is no type of freedom for their people and the government has full control of all decisions. This causes the government to not know what needs to be produced because they do not use the supply and demand method.

2. Capitalist Economy

   • Capitalist economy is when most of the goods and production is controlled by the people who own them verses the government. This separates the power between the government and the market. An example of this economic system is the United States.
     • Some advantages to a capitalistic economy is that you have four basic rights. You have the right to own your house/property, the right to own and keep all earnings from your business, the right to compete with other businesses or individuals (under government rules), and lastly the right to choose where you want to live or work.
     • One of the major disadvantages to a capitalist economy is that there is a lot of inequality in the peoples income. Another disadvantage to capitalism is that business owners can gain too much power and take advantage of consumers. This is considered to be called a monopoly. Under a capital economy, social needs can be ignored. The business owners do not consider if they are harming the people or environment in anyway.
     • Another benefit to a capitalist economy is that is provides economic freedom. When a government provides economic freedom, it also allows political freedom as well. Thus, this why it is important to have an economic system in the first place.

3. Socialist Economy

   • A socialist government is when most of the basic businesses are all owned by the government, so the government can distribute the profits equally to the people. There are some smaller businesses that are allowed to be controlled by the people, however the government taxes them a lot to help support the government socialism. An example of this type of economy is Sweden.
     • The major advantage to socialist economy is that everyone is equal. The government splits the wages evenly, so that everyone has equal opportunity. They also tax those who are more wealthy and give that taxation to the poor, so the money is distributed evenly. Some other advantages include free healthcare, free childcare and most importantly free education through college.
     • A major disadvantage to a socialist economy is that those who are in higher paying jobs, such as doctors and lawyers, are getting more taxed so the people can stay equal. Although this may seem fair, these people in this field worked harder, went to school longer, yet the government controls how much they can earn. This takes away from the peoples incentive and makes the people not want to work harder for their degrees.
     • Unlike capitalist and communist economy, the people are treated equally and all seen as one. Which prevents people from being misjudged or misrepresented by the color of their skin, race or religion.

4. Mixed Economy

   • A mixed economy is a combination of multiple types of economy systems. It is usually a mixture between capitalist and communist economy. Some parts are controlled by the government, while other parts are controlled by the people (business owners). An example of this type of economy is Germany.
     • One advantage to a mixed economy is that there are less intervention from the government, which allows businesses to run their business their own way. Another advantage is the the government can increase taxes which will reduce inequality in peoples income. Also, the government only gets involved when needed to fix the market place, which still allows businesses to be in control, however they are still under government ruling.
     • One major disadvantage to a mixed government is that sometimes it is hard to find the balance between government and the people. Sometimes the government gets too involved, while other times they do not get involved when they are needed. Another disadvantage is that there is no competition which causes debt for the government because there is not drive to do or produce more.
     • In a mixed government there is not as much freedom in comparison to a capitalist economy. People cannot practice religion necessarily anywhere they want, including schools.