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TRADITIONAL• Families, clans, or tribes make economic
decisions based on customs and beliefsEx.) Kavango people of Namibia in southern Africa
Ex.) Amish people living in America
COMMAND• A system where society’s leaders, usually central
government make all economic decisions; called a CENTRALLY PLANNED ECONOMY
Ex.) North Korea
Kim Jong II
Ex.) Cuba
Fidel Castro; Raul Castro
MARKET• Based on individual choice not government directives;
consumers vote with their dollars and producers make decisions based on what can make them the most money;
• In a market economy, people make decisions based on their own self-interest
Ex.) UK
Ex.) US
What economic system does the US have? How do you know?
• We have a Market-Command system
• The government controls certain aspects of our society known as the public sector; things like schools, postal service, etc.
• For the most part, producers decide what they’ll produce and consumers are allowed to spend their money how they would like
What are the advantages and disadvantages of a traditional
economic system?ADVANTAGES:
•The three economic questions are clearly answered by custom and tradition•There is little disagreement over economic goals
DISADVANTAGES:
•They resist change•They are less productive because of this•Everything is based on tradition so people aren’t always using their strengths•They have a lower standard of living
Why are traditional economies being forced to change?
• Modern telecommunications have bombarded these societies with images of what the rest of the world is like; the young people see these things and want them
• Many are leaving their societies to find a different life for themselves
COMMUNISM SOCIALISM MARKET SYSTEM
WHO OWNS RESOURCES?
HOW ARE RESOURCES ALLOCATED?
WHAT ROLE DOES
GOVERNMENT PLAY?
Government
Government planners decide how resources
are used
Government makes all economic decisions
Government owns basic resources;
the rest are privately owned
All resources are privately
owned
Government planners allocate basic
resources; market forces allocate privately-owned
resources
Government makes
decisions in the basic industries
Market forces allocate
resources
Government’s role limited-mostly to ensure market
forces are free to work
What effect do command economies have on people?
ADVANTAGES DISADVANTAGES
They try to provide for everyone: sick, elderly Central planners usually have very
little understanding of local conditions
Workers have very little incentive to improve their productivity
They face shortages
Individual rights are subordinate to the needs of the state
Leaders can choose to produce items that do not make money
Ex.) medicines
Why are consumer goods often in short supply in a command
economy?Because they often set prices well below
that of a market economy.
Why do these economies often fail?
Because of the human suffering that often goes hand in hand with command
economies.
Karl Marx
MAJOR WORKS:
Das Kapital
The Communist Manifesto
Karl Marx
FAMOUS QUOTE:“Workers of the world unite; you have nothing to lose but
your chains.”
The whole industrial system relied on the exploitation of workers. He was telling them to unionize and fight back.
Karl Marx
BELIEF ABOUT WORKERS & BOSSES:He believed that once the wealth was so concentrated in so
few hands, that workers would revolt and create a new society without economic class.
BIBLIOGRAPHY:• http://www.venturepublications.com.na/images/preview/303_kavangopeople.jpg• http://desktopd.com/wp-content/uploads/2010/08/Raul-Castro.jpg• www.thenewblackmagazine.com/Photofiles/castro.jpg • http://missiledefense.files.wordpress.com/2010/03/kim-jong-il.jpg• http://www.publicaffairslinks.co.uk/images/uk-flag.png• http://ec.europa.eu/education/img/flags/usa.gif• http://www.corbisimages.com/images/67/7936FED6-2F84-4E43-ADFC-5F1D3F3555
FE/TL020010.jpg• http://farm1.static.flickr.com/103/267236537_fd1aaf901f_o.jpg• http://libcom.org/files/images/history/marx.jpg• http://www.inkblotmazes.com/images/Karl-Marx-Maze-1250.png• http://www.scenicreflections.com/ithumbs/Workers_Revolt_Wallpaper_x5zrw.jpg• http://media.web.britannica.com/eb-media/33/91633-004-5B366CAF.jpg