free enterprise socialism communism...socialism command economy (which we will call communism)...
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Economic Systems
How people and societies conduct the exchange
of goods and services around the world.
Economic Systems
Americans tend to have strong reactions to the following terms. On
your notes write down 2 or 3 characteristics that come to mind for
each of the following terms (it’s ok if you don’t know for sure, I
want to see what you know and think):
Free Enterprise (Capitalism)
Socialism
Command Economy (which we will call Communism)
Traditional Economy
Next, number 1-4 in your notes. Next to each number write the
economic system that you think goes with each phrase - using
Free Enterprise, Socialism, Communism, and Traditional.
1. From each according to his ability, to each according to his deeds.
2. From each according to his ability, to each according to his needs.
3. Production is privately owned & operated for profit, usually in
competitive markets.
4. Production is primarily for survival, but can be traded for other
necessary goods.
Economic Systems
Answers…
1. Socialism (From each according to his ability to each according to
his deeds.)
2. Communism (From each according to his ability to each according
to his needs.)
3. Free Enterprise (Production is privately owned and operated for
profit, usually in competitive markets.)
4. Traditional (Production is primarily for survival, but can be traded
for other necessary goods.)
Free Enterprise Fundamental Questions:
1. What should be produced?
2. How should it be produced?
3. Who gets it produced?
4. What are some advantages and disadvantages to this product?
Based on supply and demand
•Products are produced by privately owned businesses
•Very little government involvement
•Individuals with the means to purchase the goods receives the
product.
Who has the power? The consumer.
Socialism
•Based on what is needed for the greater good instead of what the
consumer desires.
•Products are produced by collective labor = those whom contributed
to the labor receive the finished product.
•Reduced incentives for the laborer, since achievement is rarely
rewarded.
•Who has the power? The laborers, as in the entire group, not the
individual.
Communism Similar to Socialism in that it is based on what is needed for the
greater good and NOT the individual.
•Products are the result of collective labor, and those with the
biggest NEED receive the finished product.
•The government or a small elite group typically owns factories,
businesses, and resource hubs.
• The government or group make all the decisions.
•This economy has many issues: such as the free rider.
•Who has the power? The government, or a small group of elites.
Traditional Traditional economies = less developed societies
•Technology or the environment restrict the large-scale production
of a good, and
•Usually consists of subsistence farming or hunting & gathering.
•The food grown by the individual farmer is used to survive, with
any leftovers or surplus being bartered for necessary goods such as
medicine.
•These economies can be perpetuated due to poverty or a sense of
cultural tradition.
Who has the power? If anyone, it is the individual producer, but a
lack of technology and wealth offset this power.
Free Enterprise Socialism
Communism Now, take what you have learned about these three economic
systems and use what you know about other countries to classify
each country into one of these economic systems using a chart
similar to the one below. What country NOT shown would you
classify as Traditional?
USA Cuba
Japan China
England Laos
Sweden Canada
N. Korea Mexico
Vietnam Norway
Free Enterprise
(Capitalism,
Free Market)
Socialism Command/
Communism
* - It’s important to understand that these countries have Communist governments,
yet claim to practice Socialist economic systems. However, based on their
economic practices, we know they use a Command, or Communist economy
system, although most are moving more to the left.
Free
Enterprise/Capitalism/
Free Market
Socialism Command/
Communism
USA Norway China*
Sweden Sweden Vietnam*
Canada Canada Cuba*
Japan North Korea*
England Laos*
Mexico
Production of Goods & Services
Subsistence Agriculture v. Commercial Agriculture
Subsistence: To feed you & your family. “survive”
Commercial: Enough to sell and make money. “profit”
Cottage Industries v. Commercial Industries
Cottage: Small, village, low output “family business not mobsters”
Commercial: Large Scale, high output “Corporation”
Levels of Economic Activities
Primary
Secondary
Tertiary
Quaternary
Number your paper from 1-10. For each of the photos we are
going to look at, write down what level of economic activity is
depicted, and what type of production type it is.
Attachment #2
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