Economic SystemsEconomic Systems

By James BlakeBy James Blake

44thth Period Mrs. Dennard Period Mrs. Dennard

Market Your Self Market Your Self

Capitalism• Capitalism is a difficult, problematic term; it Capitalism is a difficult, problematic term; it

applies to a diversity of phenomenon spread applies to a diversity of phenomenon spread across disparate historical across disparate historical culturescultures with with substantially variable world views. However, the substantially variable world views. However, the term is an Enlightenment European term used to term is an Enlightenment European term used to describe European practices; so the term describe European practices; so the term "capitalism" means more than just a body of "capitalism" means more than just a body of social practices easily applied across social practices easily applied across geographical and historical distances, it is also a geographical and historical distances, it is also a "way of thinking," and as a way of thinking does "way of thinking," and as a way of thinking does not necessarily apply to earlier European origins not necessarily apply to earlier European origins of capitalism or to capitalism as practiced in other of capitalism or to capitalism as practiced in other cultures. cultures.

• The earliest forms of capitalism—which we The earliest forms of capitalism—which we call "mercantilism"—originate in Rome, the call "mercantilism"—originate in Rome, the Middle East, and the early Middle Ages. Middle East, and the early Middle Ages. Mercantilism might be roughly defined as Mercantilism might be roughly defined as the distribution of goods in order to realize the distribution of goods in order to realize a profit. Goods are bought at one site for a a profit. Goods are bought at one site for a certain price and moved to another site and certain price and moved to another site and sold at a higher price. As the Roman empire sold at a higher price. As the Roman empire expanded, mercantilism correspondingly expanded, mercantilism correspondingly expanded. But the contraction of the Roman expanded. But the contraction of the Roman empire from the fifth century onwards also empire from the fifth century onwards also contracted mercantilism until, by the 700'scontracted mercantilism until, by the 700's

CommunismCommunism• Communism - Marxism & The

Communist Manifesto• Communism, which is also described as

"Revolutionary Proletarian Socialism" or "Marxism," is both a political and economic philosophy. The abridgment of Communism is enclosed in two primary writings: (1) The Communist Manifesto, which was first published in 1848 by Karl Marx.

SocialismSocialism• This conviction puts This conviction puts socialism in opposition to in opposition to capitalism, which is based on private ownership of the means of production and allows individual choices in a free market to determine how goods and services are distributed. Socialists complain that capitalism necessarily leads to unfair and exploitative concentrations of wealth and power in the hands of the relative few who emerge victorious from free-market competition—people who then use their wealth and power to reinforce their dominance in society.

• Because such people are rich, they may choose where and how to live, Because such people are rich, they may choose where and how to live, and their choices in turn limit the options of the poor. As a result, and their choices in turn limit the options of the poor. As a result, terms such as terms such as individual freedomindividual freedom and and equality of opportunityequality of opportunity may be may be meaningful for capitalists but can only ring hollow for working people, meaningful for capitalists but can only ring hollow for working people, who must do the capitalists’ bidding if they are to survive. As who must do the capitalists’ bidding if they are to survive. As socialists see it, true freedom and true equality require social control socialists see it, true freedom and true equality require social control of the resources that provide the basis for prosperity in any society. of the resources that provide the basis for prosperity in any society. Karl Marx and Friedrich Engels made this point in Manifesto of the Manifesto of the Communist PartyCommunist Party (1848) when they proclaimed that in a socialist (1848) when they proclaimed that in a socialist society “the condition for the free development of each is the free society “the condition for the free development of each is the free development of all.”development of all.”

• social and social and economiceconomic doctrine that calls for doctrine that calls for public rather than private ownership or public rather than private ownership or control of property and natural resources. control of property and natural resources. According to the socialist view, individuals According to the socialist view, individuals do not live or work in isolation but live in do not live or work in isolation but live in cooperation with one another. Furthermore, cooperation with one another. Furthermore, everything that people produce is in some everything that people produce is in some sense a social product, and everyone who sense a social product, and everyone who contributes to the production of a good is contributes to the production of a good is entitled to a share in it. Society as a whole, entitled to a share in it. Society as a whole, therefore, should own or at least control therefore, should own or at least control property for the benefit of all its members.property for the benefit of all its members.

Market Economy

• An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning. This is the opposite of a centrally planned economy, in which government decisions drive most aspects of a country's economic activity.

• Market economies work on the assumption that market forces, such as supply and demand, are the best determinants of what is right for a nation's well-being. These economies rarely engage in government interventions such as price fixing, license quotas and industry subsidizations.

• While most developed nations today could be classified as having mixed economies, they are often said to have market economies because they allow market forces to drive most of their activities, typically engaging in government intervention only to the extent that it is needed to provide stability. Although the market economy is clearly the system of choice in today's global marketplace, there is significant debate regarding the amount of government intervention considered optimal for efficient economic operations.