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What about other countries? Political Labels Fundamental Law Political Systems Three Powers Economic Systems
Essential Question
1. What are the advantages and disadvantages of the political and economic systems of other nations around the world?
They Have Them Too
Liberal Open to change, Government promotes equality & social freedom
Conservative Traditional solutions, Government promotes order & economic freedom
Moderate Middle of the Road, Promotes compromise
Worldwide Governments
Constitutional MonarchySultanateJunta – Military DictatorshipTheocracyOligarchy Tribal, etcCommunismSocialismParliamentary Democracy
Differences
US is a conservative nation by comparison Our liberal parties are very conservative abroad
Other nations have many more political parties Proportional Representation
Other nations’ political parties change more frequently
“Democratic Socialist”
Similar to socialism but with a strong emphasis on democratic decision-making both in politics and economic affairs
Very common party in European countries
Free Enterprise
Private individuals control production, wages, prices, etc
“Invisible Hand” controls the market Supply & Demand
No guarantees
Central Planning
Government controls control production, wages, prices, etc
Series of Five Year PlansBasic needs are met for all
Mixed Economies
Free Enterprise has major flawsCentral Planning has major flawsAll nations today have a combination of the
two Spectrum
How Does An Economy Work?
Nations must answer 3 basic Economic question: What goods and services should be produced? How should the goods and services be
produced? For who should the goods and services be
produced?
The way a nation answers these questions defines their economy.
Types of Economic Systems
All economic systems fall into one of two broad categories: Market (or Capitalist) System Command (or Planned) System
No economy can be purely market or purely command
Elements of both economies are found in all systems this makes all economies mixed
A Pure Market Economy
No government involvement in economic decisions
The government lets the people answer the three basic economic questions What? Customers decide through their purchases How? This is left up to the individual business –BUT-
a business must be profitable Who? People who have money can buy more – this
encourages hard work and investments
A Pure Command EconomyThe Government controls the factors of
production and makes all the decisions The government is responsible for answering the
three economic questions What? One person ( a dictator) or a group of
government officials (central planning committee) decide what is to be produced
How? The government owns all the factors of production and makes all the decisions about production
Who? The government decide who receives what is produced in the economy
Mixed Economies
Some government involvement through mandatory laws and regulations that businesses follow Labor Laws, Minimum Wage
The government provides social programs for those who need help Medicare, welfare
All economies are mixed they are classified based on how much the government is involved in the process
Continuum of Economic Systems
Command Economy
Communism
On the far left
Market Economy
CapitalismOn the far
right
SocialismLeft of center but right of communism
Capitalism
An economic system characterized by private ownership of businesses and marketplace competition
The government is concerned about its people and takes care of those who cannot care for themselves
The political system is a democracy with leaders elected by the people
The United States and Japan are examples of a Capitalist Economy
Socialism
Increased government involvement in people’s lives and the economy
The main goal is to keep prices low for all people and to provide employment for many
The government runs key industries and makes economic decisions
More social services for all and free or low cost medical care
Canada, Germany, Sweden, Australia and Great Britain are all examples of socialist economies
Communism
The government runs everything (Totalitarian government)
Only one political party, the Communist party, runs the government
All people able to work are assigned jobs – there is virtually no unemployment
The government assigns housing, schools, and occupations
There is little to no economic freedomCuba, North Korea, and China are
examples
Economies In Transition
The breakup of the Soviet Union is the best example of a country changing from a Command Economy to a Market Economy
State owned industries have been privatized (government owned businesses are sold to private citizens)
Today even socialist countries are selling some of their government owned businesses to individuals
Great BritainPolitical parties play more role in governing process
Parties help to form the government