Economic Systems

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Learning Objectives

• I can name and describe the different types of economic systems

• I can compare and contrast different economic systems around the world.

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• To more effectively live, humans have set up economic systems and governments.

• Economic Systems Theories of:

a. production (making)

b. distribution (shipping, buying & selling)

c. consumption (using)

a. Used by earlier civilizations and less developed countries

b. Subsistence living

c. Depend on customs, traditions, & inheritance to guide economic activities

d. Found among indigenous populations that largely depend on agriculture for their living

information about both economies taken from http://www.wisegeek.com/what-is-the-difference-between-a-traditional-and-market-economy.htm

1. Traditional Economy

2. Capitalism (a.k.a.Free Market system) a. private ownership of property and/or businesses

b. no gov’t regulation (rules)

c. supply & demand

c. encourages competition

d. class system.

Adam Smith

Examples: U.K., France, Germany, Japan, S. Korea, Norway, Greece, S. Africa, Mexico

• Class System is a part of capitalism

• - Upper (elites)

- Middle (bourgeoisie)

- Lower/workers

middle upper/elites

3. Socialism – A theory advocating some gov’t control (regulation) of economic activity. It also relies on the redistribution of wealth.

Examples: Denmark, Finland, Ireland, Norway, Canada, Sweden, Belgium

4. Communism– “higher stage” of socialisma. Total gov’t ownership of property and businesses

b. Pro-worker (proletariat)

c. Classless system (everyone is equal)

d. Command Economy

- What is the color of communism?

Examples: China, Cuba, Laos, Vietnam & N. Korea

- The color of communism - red

Origin of Communism - Karl Marx (German philosopher)

Published in 1848

• What type of economic system does the U.S. have?

• The U.S.A., technically, has a Mixed Economy capitalist (free market) economy with some government regulation (socialism).

• Where is the U.S. on the capitalist/communist continuum? What about Canada? 1 to 10

CommunismCapitalism

Socialism

1 2 3 4 5 6 7 8 9 10

• Despite the technicalities, most people call our economic system . . . CAPITALISM!!!

• Does capitalism work?

Donald Trump – 2.9 billion

#2 (richest in the world) Bill Gates – 61 billion

#3 Warren Buffet – 44 billion

For some . . . capitalism is great!

Paris Hilton

For others . . . not so much (hurts those who do not have $)

Republicansrepublicans

Capitalism vs. Communism and/or Socialism . . . you be the judge.

Again, what type of system does the U.S. have?

Occupy Wall Street movement (2011) which protested against greed, corruption, economic inequality, etc.

• Capitalists use propaganda to demonize communism and socialism.

“Communism” and “Socialism” are considered dirty words to many people in the United States.