Economic System

Economic System

1. Capitalism

   • Capitalism is made of two systems, economic and political. This economic system sanctions a free-enterprise for a country’s line of business specifically The United States of America for private business owners to conduct business in which they obtain all profits as opposed to the state obtaining profits.
     • Ex: Small businesses in the United States of America are duly free to conduct legal business with the assurance of all profits are for such entity.
       • Pros: Opportunity for business growth, manufacturing and distribution strengthens this economic system.
         • Cons: Inequality on working class demographics. Those who are not able to work are not able to earn capital. Leaves the elderly, sick & disabled, and children to depend on other sources of income.

2. Communism

   • Communism is an economic system in which the government instructs the people where they ought to work. The government represents the cluster. Communism provided for those who cannot work.
     • Communism encourages a large scale of gathering economic resources. It generates the manpower to innovate as opposed to applying it. It does not allow self-interest but to work as whole. Cuba is known for its communism with the following of Fidel Castro.
       • Ex: Communism encourages a large scale of gathering economic resources. It generates the manpower to innovate as opposed to applying it. It does not allow self-interest but to work as whole. Communism relies on preservation of infrastructure. Cuba is known for its communism with the following of Fidel Castro.
         • Pros: Communism creates opportunity for everyone to participate and not indulged in self-interests. Communism encourages a large scale of gathering economic resources and generates the manpower to innovate as opposed to applying it. It does not allow self-interest but to work as whole. Communism prevents inequality of income.
           • Cons: In this economy it is difficult to stay up-to-date with consumer information. The government controls the costs for supply and demand. This creates too much and too little of products. There is no free market; a black market is created to trade products that are not provided by the government.

3. Mixed Economy

   • Mixed economy is a combination of market, command, and traditional economies; private property is protected and the means of supply and demand are to conclude the cost differentiation.
     • Ex: The United States of America exercises a mixed economy which maintains focus on ownership of innovation as well as enforcing general welfare. A mixed economy limits the government’s power on innovation.
       • Pros: Mixed economy allows free enterprise to conduct business. Ensure goods and services are created and distributed. High profits are assured.
         • Cons: Greed can end up controlling the economy, therefore leading to a recession. Mixed economy lacks support when there is too much freedom.

4. Socialism

   • Socialism is an economic system that the government should have primary ownership of all businesses to evenly distribute profits among the people of such population. The government taxes the wealthy to reallocate to the poor through diverse government programs.
     • Ex: Socialism advocates free health care, free child care, and free education through college as well as career incentives such as longer vacations, better employee benefits such as sick pay, working fewer hours per week.
       • Pros: Profits are shared equally amongst all working classes; reducing poverty. Prevents discrimination and helps preserve natural resources.
         • Cons: Socialism must have cooperation from the people in order for the economic system to succeed. Socialism does not offer incentives for competitive skills. The government holds all the power which can become misleading.

5. Importance of an Economic System

   • An economic system provides essentials in delivering goods and services in a profitable way. It generates opportunity for individuals to set forth their abilities to operate. An economic systems utilizes resources to endure production.