The World’s Economic The World’s Economic SystemsSystems

Economic SystemsEconomic Systems

Various economic systems attempt solutions Various economic systems attempt solutions

to the problem of scarcityto the problem of scarcity

Traditional - Undeveloped nations/ regionsTraditional - Undeveloped nations/ regions

MarketMarket - Industrialized, capitalist, some socialist - Industrialized, capitalist, some socialist

nations nations

Command - Communist, some socialist nations or Command - Communist, some socialist nations or

dictatorshipsdictatorships

MixedMixed - Most modern economies are now - Most modern economies are nowmixed economiesmixed economies

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CapitalismCapitalismAdvantagesAdvantages

EfficiencyEfficiency is the main advantage of is the main advantage of CapitalismCapitalism..

-- Efficiency created by freedom of choice, guided by price Efficiency created by freedom of choice, guided by price

- Price directs purchases…purchases direct production- Price directs purchases…purchases direct production

- Resources used efficiently to make what people want- Resources used efficiently to make what people want

FlexibilityFlexibility – capitalism accommodates – capitalism accommodates change change easilyeasily

- Self-adjusting – responsive to consumer demand.- Self-adjusting – responsive to consumer demand.

- Changes can occur in many places at once.- Changes can occur in many places at once.

Encourages ExcellenceEncourages Excellence – Rewards ambition – Rewards ambition

CapitalismCapitalismDisaDisadvantagesdvantages

Doesn’t always satisfy everyone’s needs – Doesn’t always satisfy everyone’s needs – only those willing and able to buy goods – only those willing and able to buy goods – ignores poor and those who can’t compete.ignores poor and those who can’t compete.

Focus is private sector – ignores public such Focus is private sector – ignores public such as roads, the environment, as roads, the environment, unlessunless there is there is profit in it.profit in it.

PurePure Capitalism ultimately erodes itself - Capitalism ultimately erodes itself - reaches a point where competition is reaches a point where competition is eliminated & price becomes irrelevant.eliminated & price becomes irrelevant.

Why is this so?Why is this so?

THE THIRD WORLD IS VERY MUCH LIKE THE THE THIRD WORLD IS VERY MUCH LIKE THE

FIRST WORLD - JUST POORER: WHAT WORKS FIRST WORLD - JUST POORER: WHAT WORKS

FOR THE WEST WILL WORK FOR THE REST AS FOR THE WEST WILL WORK FOR THE REST AS

WELL" WELL" --Margaret Thatcher, Former Prime Minister of EnglandMargaret Thatcher, Former Prime Minister of England

Why Capitalism?Why Capitalism?

SocialismSocialismAdvantagesAdvantages

Fairness -main advantage of SocialismFairness -main advantage of Socialism- tries to distribute resources evenly across society- tries to distribute resources evenly across society

- allows some private property and investment- allows some private property and investment

Balance attempted between Balance attempted between government allocation of resources government allocation of resources and private allocation.and private allocation.

Basic social services (healthcare) are Basic social services (healthcare) are centrally planned and distributed centrally planned and distributed throughout society.throughout society.

SocialismSocialismDisadvantagesDisadvantages

Incentive to succeed lessened - Why?Incentive to succeed lessened - Why?

When scarcity causes cutbacks – When scarcity causes cutbacks – everyone suffers equally, regardless everyone suffers equally, regardless of how hard one works.of how hard one works.

Economy is slower to respond to Economy is slower to respond to economic difficulties – government economic difficulties – government bureaucracy.bureaucracy.

CommunismCommunism Extreme Socialism - AuthoritarianExtreme Socialism - Authoritarian

Government owns all resources – NO Government owns all resources – NO private property. Plans for all uses of private property. Plans for all uses of them.them.

Little or no political freedomLittle or no political freedom

Russian vs. ChineseRussian vs. Chinese Industrial vs. AgrarianIndustrial vs. Agrarian

CommunismCommunismAdvantagesAdvantages

Central Planning – one specific Central Planning – one specific direction for each departmentdirection for each department

All standards (sizes…choices, All standards (sizes…choices, etc…) are known.etc…) are known.

Everyone knows the role they Everyone knows the role they play in the job they do. play in the job they do.

CommunismCommunismDisadvantagesDisadvantages

No incentive to work hard – no one gets any No incentive to work hard – no one gets any more when they do. WHY NOT?more when they do. WHY NOT?

When government stalls – economy stalls.When government stalls – economy stalls.

Difficult to react to change. WHY IS THIS?Difficult to react to change. WHY IS THIS?

Top down direction leaves no room for Top down direction leaves no room for correction at the operations level.correction at the operations level.

People become frustrated and system People become frustrated and system breeds mediocrity.breeds mediocrity.

How is a system that lasted for over 70 years is losing its appeal?

Is there any way for systems of Socialism/Communism to succeed in today’s World?

Is the equality they offer worth trying?

What’s Good?