Economic Systems

Economic Systems

1. Capitalism is the economic system in which individuals own all or most businesses. These individual business owners work for a profit and together decide what to produce, how much to produce, how much to charge consumers, and how much to pay workers.

   • The United States operates under a mostly capitalist economy. With focuses on freedoms, profit, and economic growth, the U.S. offers opportunities for private land and business ownership, free trade, and social freedoms. Supply and demand control the market with a variety of goods and services readily available.
   • Pros: Freedom to work and live anywhere, incentives for working hard, free trade, large variety of goods and services, market controlled by supply and demand, assistance programs for those in need, innovative market-leading ideas.
   • Cons: Social classes largely divided, expensive college and healthcare .

2. Socialism an economic system that focuses on social equality. Most of the businesses are owned by the government so that the profits can be equally distributed among the citizens.

   • Sweden is an example of a socialist economy that focuses on equality. Major businesses are government owned, but some small businesses can be privately owned. Some markets are government controlled, and others are free. The high tax rate affords the government to control education, healthcare, utilities, transportation, and the media.
   • Pros: A variety of social programs such as healthcare, childcare, and education, fewer work hours and more vacation time, great employee benefits.
   • Cons: Higher taxes, "Brain Drain" limited market and trade, restricted competition.

3. Communism, governments own almost all the of businesses and make all of the economic decisions. Communism is slowly disappearing.

   • North Korea is an example of a Communist economy that emphasizes equality. The market offers few choices on competing goods or services. All businesses and markets are government owned and controlled, which provides little incentive for employees to work hard. The citizens have limited freedoms such as owning a business, rights to protest, or the freedom practice religion.
   • Pros: Emphasis on equality, social services.
   • Cons: No benefit for working hard, highest taxes, limited Competition, limited Supply.

4. Mixed is a combination of the economic systems that involve a majority of capitalism or socialism but also has characteristics of the opposite system.

   • Germany is an example of a mixed economic system that balances freedom and equality. It allows private ownership of land and businesses, but are government regulated. The government controls some institutions and trade within and among other countries. The high tax rate funds the countries defense and common welfare programs.
   • Cons: Government controlled trade, possibility of shortage or oversupply of goods
   • Pros: Private land and business ownership, balance of freedom and equality, incentive to work hard.

5. The United States operates on a mixed economic system which is predominantly capitalism. Private individuals have the opportunity to own businesses with the protection of four fundamental rights of capitalism. These freedoms include the right to own property and a business as well as the freedom of choice and competition. The United States also combines socialist portions to its economic systems by offering government-owned businesses and programs to help bring equality to the lower class.

6. Economic systems are the foundation of business. Each economic system has unique benefits and detriments that reflect the economies business and its people. An economic system is established to implement consistency for the economy as a whole.