Economic Systems

Economic Systems

1. Capitalism

   • a country's trade and industry are controlled by private owners for profit, rather than by the state
   • characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange,, a price system, and competitive markets
   • one of the most important factors of capitalism is the ability to have private control over the factors of production
   • Pillars of Capitalism
     • Private property: which allows people to own tangible assets such as land and house and intangible assets such as stocks and bonds
     • Self-Interest: through which people act in pursuit of their own good, without regard for sociopolitical pressure
   • Some of the Countries using Capitalist System
     • Poland
     • Canada
     • Colombia
     • U.S.A.
     • United Kingdom
     • Japan
     • Israel
     • Australia
     • Maylasia
     • Mexico

2. Communism

   • PROS of Communism
     • has a centrally planned economy
     • can mobilize resources quickly, ignoring individual self-interest
     • can wholly transform societies to conform to the planner's vision
   • CONS of Communism
     • elimination of the free market
     • government sets prices, the laws of supply and demand do not
     • there is no feedback from people without results of supply and demand effects
     • surplus of one thing and shortage of another due to lack of up to date information about consumer needs
   • goal is to create a stateless, classless society
     • take away the power of the "ruling class' who control the means of production
       • establish worker control of the means of production
   • Only Countries using Communist System
     • China
     • Cuba
     • Laos
     • North Korea
     • Vietnam

3. Socialism

   • An economic system in which everyone in society equals owns the factors of production
     • The value made belongs to the people who make it, instead of a group of private owners
       • Reduces disparity in wealth in areas as well as societal ranks and class.
   • Six Essential Components
     • Common prosperity in a steady, sustainable manner
     • Implementing the people's political agenda
     • a strong, united and sovereign homeland
     • progressive socialist culture
     • policies that promote the environment and meet economic needs
     • successful resistance to a "ruling class"
   • PROS of Socialism
     • workers are not exploited, profits are shared equally
     • provides for those who can't work
     • no one is discriminated against, poverty is eliminated
     • everyone works jobs they like and want to do
   • CONS of Socialism
     • relies on cooperative nature of people to work
     • ignores those in society that are competitive
     • doesn't reward people for being entreprenurial
     • struggles to be as innovative as capitalistic societies
     • government has a lot of power
   • Some of the Countries using Socialist System
     • Italy
     • Venezuela
     • France
     • Brazil
     • Croatia
     • Sweden
     • Portugal

4. PROS of Capitalism

   • Economic freedom helps political freedom. If governments own the means for production and set prices, it could lead to powerful state and bureaucracy which may extend into other areas of life
     • Efficiency. Businesses face incentives to be efficient and produce goods that are in high demand
       • Innovation. The desire to create and develop profitable products
         • Economic Growth. Facing incentives to be innovative and work hard creates a climate to innovation and economic expansion.

5. CONS of Capitalism

   • Monopoly Power. Businesses can exploit monopoly power to charge whatever they want
     • Social Benefits Ignored. With large profits could come ignoring living standards, ie pollution
       • Inequality & Social division due to economic level differences
         • Inherited Wealth. People are born with a advantage because money & property can be passed down

6. The United States is one of the countries that operates with a capitalist economy, which many citizens see as an important part of the democracy and building the "American Dream."

   • There are benefits and drawbacks to a capitalist economy. As far as the positive aspects capitalism often drives the best products at the best prices. Economic growth and innovation are also major benefits.
     • As far as drawbacks, capitalism has a few. One of the biggest drawbacks is that it does not provide for anyone that does not have skills. It also does not promote equality of opportunity.
       • In short, some people may not get the opportunity that others receive
   • What economic system to we have in the United States?

7. Why do we need an economic system?

   • It helps the country as a whole and it helps and individual make decisions about goods, services, labor, capital, health, investments and more
     • Economic systems ensure we use resources efficiently, otherwise making things chaotic and disorganized.
       • Having an economic system is place can improve the living standards of those in society as it develops and evolves.