Economic Sytems

Economic Sytems

1. Capitalism

   • an economic system based on private ownership of the means of production and their operation for profit.
     • An example of Capitalism Economic System is a free market in which what, how much the market-by buyers and sellers negotiate produce and price for goods and services.
   • Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets.
     • Pros: Encourages hardworking businesspeople Businesses have incentives to be efficient Consumers are free to choose what products to buy prevents large bureaucratic government More alternatives
       • Cons: Business can gain monopoly power and exploit consumers Business with monopsony power can pay low wages Externalities can damage the environment leads to large inequality

2. Socialism

   • an economic system based on the premise that some, if not most, essential businesses should be owned by the government so that profits are distributed evenly among the people.
     • An Example of Socialism is when the government increases the tax rates from the wealthier people and redistributes it among the poor through various government programs.
       • Pros: Social Equality, Free Education, Free Healthcare, Free Childcare, Extended Vacations, Fewer work hours per week
         • Cons: Brain Drain, Loss of brightest people because of high taxes

3. Communism

   • economic and political system in which the government makes almost all financial decisions and owns virtually all the significant factors of production
     • An Example of Communism is Cuba; citizens are not allowed practice religions, change jobs, or move to the town of their choice.
   • Pros: Equality- everyone gets the same chances Almost has an employment Almost everyone has an education Agriculture and manufacturing are emphasized
   • Con's Rights are restricted No one can oppose the government's decision People will never be told the truth Earning is limited Government guesses the needs of people often result in shortness of food or clothing Usually occurs in poverty

4. Mix Economies

   • Economic systems in which some allocation of resources is made by the market and some by the government.
     • The US is an example of a Mix Economic system; we live in a free Country where our opinion matters, our private properties are protected. Not all earnings or businesses belong to the government.
   • Pros: Equal Distribution control More efficiency for private firms freedom for private enterprise to thrive on their own Safe Haven from Poverty Greater Chance for the Government to Implement Good Policies More Job Investments Coming In
     • Cons: Challenge of Finding a Balance Government Going Too Far Excessive Intervention by the Government Limited Corporate Size Higher Taxes

5. The United States Economic System is a Mix Economic System. The Government has a significant role in military, international trade, and transportation and Federal government can safeguard people and markets. The mixture of the US economic system consists of Market Economy that includes private property, supply, demand, price and is driven by self- interest. The other half is Command Economy that consists of the Government owning some key industries and can manage social welfare programs.

6. The economic system is needed to ensure the stability, peace amongst nations and thriving human culture. Our Economy is what determines of financial benefits and is the way in which everything is produced and distributed. Having enough economy is extremely important for stability, low crime levels, and cultural, scientific and technological progress.