business policy in different economic systems
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University of Madras
Chennai, Tamilnadu, India
Skylark College
Kathmandu, Nepal
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In years 10001820 world economy grew six-fold, in years18201998 world economy grew 50-fold
Provides Choice to customers Provides valuable goods and services Capitalism actively rewards positive traits like hard work Similarly, it punishes negative traits such as laziness and theft Narrows the gap between common person and wealthy
Provides opportunity to realize dreams and desires Capitalist societies usually do not have large black markets Build on democracy Social Good
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Downfall of work ethics Free Market + Self Interest Accumulation of wealth Encourages inequality in a society Business lobbying with government Monopolistic tendency Human resource exploitation Results in great disparities between income of
people owning the capital resources and others
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BASIS OF
DIFFERENCE
CAPITALIST ECONOMY SOCIALIST ECONOMY
Resources Ownership Privately owned State owned
Foundation belief competition brings out the best inpeople
cooperation is the best wayfor people to coexist
Earning of wealth everyone works for his own wealth everyone works for wealthwhich is distributed equally to
everyoneMarket Scenario Level playing field Protection to PSUs, Private
enterprises are permitted infew businesses only
Govt. interference Only in situations where laws havebeen broken
Fully involved
Employees motivation Highly motivated on account ofproportional benefits Rarely motivated asperformance is not rewarded
Merit Perception of better economicgrowth because of competition
Equal distribution of incomeresults in welfare of all
Demerit Few individuals/groups attainpowers, rest are exploited
Hard work is not rewarded,lazy employees also enjoyequal level of benefits
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MIXED ECONOMY is an economy that includes a variety of privateand public control, reflecting characteristics of both capitalism andsocialism.
All so called capitalist countries are in fact mixed economies.
The USA is a good example of this since it has always beenconsidered capitalist but in fact has been a mixed economy since atleast Frederick Roosevelts time. Why?... Well it has had big govt.public ownership of education, security, public funding of the privatesector, etc.
China is another good example of mixed economy as it is often
considered either communist or capitalist. But like USA, China is alsoa mixed economy.
It is also necessary to know that capitalism and socialism havecollapsed and failed in the first and second worlds and only exist inthird world countries.
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