Economic Systems - created from Mind Map

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Importance of an Economic System

Mixed

Command - Where the Central Government makes all economic decisions, while they or a collective owns the land and means of production

Market

US Economy

Traditional - Culture defines the Traditional Economic system and it is built around the livelihood of the people to determine the products and services offered.

Examples: North Korea, Cuba, Former USSR, and previously Communist China

Pros

Cons:

Can Quickly mobilize economic resources on a large scale

Capable of executing massive projects, create industrial power, and meet social goals

Not slowed down by lawsuits or environmental impact statments

Wholly transform societies to conform to a governments vision

Workers placed in jobs based on governments assessment of skills

Administration nationalizes private companies

Rapid mobilization mow down other societal needs, telling workers what jobs they must fulfill, not allowing them to move, and goods produced to not reflect public demand.

Often develop a shadow economy or black market, as people attempt to fill demands that the government will not allow

Production is disproportionate, creating too much of one thing and not enough of another

Prices set by central plan and do not measure supply and demand, rationing becomes necessary often.

Cons

Examples: Rural portions of South and Latin America, the Middle East, Africa, and Asia.

Pros

Extremely vulnerable to changes especially the weather

Population growth limited

If harvest or hunting is poor, people starve

Minimal Friction between people

Custom dictates the distribution of resources

Everyone understands their contributions toward production and what they are likely to receive, leading to less unrest

Small economies, but are much less destructive to their environment than developed economies

Lacking the capability of producing more than they need, provides more sustainability.