Economical Systems

Economical Systems

1. Capitalism

   • Free to compete without consequences.
   • Capitalism becomes the predominant economic system, but countries also pass social programs to make capitalism better. (please extend the notes to see more) Countries build on Capitalism but also implement some degree of socialism.
   • Pros
     • Economical freed helped political freedom.
       • Prices fluctuated depending on production rate and demand
         • Kept prices from getting too high or too low
     • Not state owned companies face more incentives
       • Produce useful goods more efficiently
       • Cut costs and avoid waste
       • Try new innovative working methods
       • Get rid of workers that aren't useful
       • Creates economic expansion
       • Improves living standards
   • Cons
     • Social benefits ignored
     • Private ownership over production
       • Monopoly exploitation
         • Owners make decisions about the product and it’s production.
     • Wealth inequality
       • Huge social gap between rich & poor

2. Socialism

   • They believe that...  - people should control most of the production. - goods are created for the people. - wealth and income should be shared equally among the people. - government is responsible for making the society more equal. They don't believe that workers will overthrow Capitalism suddenly and private property should be eliminated completely.  Their goal is to narrow the gap between the poor and rich
   • Modern Socialism: Sets of ideas created by lawmakers Ex: unemployment benefits Welfare programs Universal health care
   • Pros
     • Everyone has equal wealth and earning
     • Tax progressive taxes
       • Reduce income gaps between rich and poor
       • Money collected can be used to train the poor and unemployed
     • Different rights are given
       • Ordinary people
         • have greater rights
           • More control over their lives
       • Wealthier groups
         • Strictly controlled
     • Good public services
       • Health care and education
         • Able to reduce poverty and homelessness
         • Vulnerable groups are looked after better
     • Has a more controlled economy
       • Less chance of the cycle of boom and bust
     • Society cooperate rather than compete
       • More can be achieved
   • Cons
     • Decisions are made by many groups of people
       • Progress is slowed down or stopped due to no profits to make
       • Poorer goods and services for the public
       • Specific groups might try to change the result
       • Economies are less dynamic
     • People were taxed with higher taxes
       • Government spending means wastefully and inefficiently
         • Can lead to runaway inflation
     • Lack of innovation
       • Little financial support for new companies or people who want to invent thing
     • Labor disputes due to worker’s right increasing
       • Wages increase
         • High inflation
         • Difficult for employers to hire and fire
           • More unemployment
           • Ineffective workers are kept

3. Communism

   • - Meant to correct problems caused by capitalism, which is to eliminate the gap between rich & poor - Discouraged people to compete They believe that... - no private ownership on productions because private ownership encouraged greed - people should control the economy. - government should exercise the control in the name of the people.
   • Pros
     • Everyone can receive free and easily accessible healthcare
     • Everyone goes to work and receives money that can sustain their lives
       • Very little social gap
       • Decrease in crime since everyone has food
     • Every child is given the same level of educational opportunity
       • Division between different classes shrinks
   • Cons
     • Business wasn’t able to flourish
       • Limited to create new products
       • Can’t earn proper compensation
       • Motivations of creating a business are eliminated since everyone receives the same pay
     • Poverty was prevalent
       • Elected officials are corrupt
         • The people don’t know how their nation works
       • Not everyone obtain an equal profit for the work they’ve done
     • No personal freedom
       • Freedom of speak is completely taken away
       • People who criticize the government are punished harshly
     • Creative pursuits are not encouraged
       • Focus on things that will support the long-term growth of the nation
         • Little motivation in creating things