types of economies
DESCRIPTION
Types of Economies. Traditional Economy. It is based on agriculture, fishing, hunting, gathering or some combination of the above. It is guided by traditions. It may use barter instead of money. May appear to be living in poverty , even if their daily needs are being met. - PowerPoint PPT PresentationTRANSCRIPT
Types of Economies
Traditional Economy►It is based on agriculture, fishing,
hunting, gathering or some combination of the above.
►It is guided by traditions.►It may use barter instead of money.►May appear to be living in poverty,
even if their daily needs are being met.
►Most traditional economies operate in emerging markets or the Third World countries.
►They are usually located in Africa, Asia, Latin America and the Middle East.
►At its most basic level, a traditional economy exists in a hunter/gatherer and nomadic society.
►It is generally thought that all other economies got their starts as traditional economies.
►Likewise, it is generally expected that a traditional economy will evolve into either a market, command or mixed economy.
Capitalism“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their
regard to their own interest.” - Smith
Capitalism►Capitalism – an economic system based on
►private ownership and on the investment of money in business ventures in order to
►make a profit.
Capitalism►Adam Smith
Celebrated as father of Capitalist TheoryUniversity professor in Scotland
Supported CapitalismWrote “The Wealth of Nations”
Capitalism►Ideas:
Businesses compete with each other for
the consumer’s money.Each business tries to provide goods and services that are
better and less expensive than their competition.
CapitalismA market economy aims to produce the best goods at the lowest prices.►Supply and Demand
CapitalismGovernment should not interfere in the economy.►Laissez faire
CapitalismLaissez faire – letting owners of industry and business set working conditions without interference►No government regulations, such as minimum wage laws
►Free Market principles guide Capitalism
►But no examples of absolutely “pure” capitalism exist
►US is defined as a Capitalist Free Market economy but still has govt. controls/regulations in many aspects
►So more precisely, we have a MIXED economy.
Capitalism►Positive Effects:
Competition led to progress
►Negative Effects:Unequal distribution of wealth led to social unrest
Socialism
“From each according to his/her ability, to each
according to his/her work."
EXPLAIN?
Socialism►Socialism – an economic system in which the factors of production are owned by the public(govt.) and operate for the welfare of all. Limited aspects of private property
Socialism►Government actively regulates the economyControls major industries and resources. = COMMAND ECONOMY
Limited aspects of private property
►Many European countries are described as “Socialist” but they use many free market ideas/systems …..so….more precisely = Mixed Economy
Communism“The worker of the world has
nothing to lose, but their chains, workers of the world
unite.” - Marx
“From each according to his/her ability, to each according to his/her
need."
Communism►Communism – an economic system in which all means of production are owned by the people, private property does not exist, and all goods and services are shared equally.
►= COMMAND ECONOMY
Communism►Karl Marx
German journalistRadical Socialist
Wrote “The Communist Manifesto”
Communism►Friedrich Engels
Son of a wealthy German textile entrepreneur
Radical SocialistCo-Wrote “The Communist Manifesto” and “Das Capital”
Communism►In many ways, Communism was a reaction to the Industrial Revolution and Capitalism
Communism►The Industrial Revolution intensified class struggle (rich vs. poor)“Haves” take advantage of “Have-Nots” (proletariat)
CommunismWorkers are exploited by employers
The labor of workers profits employers
Communism►Marx and Engels called for workers of the world to unite and overthrow the rule of the rich.Wealth would be redistributed
Classes and private property would cease to exist
► Ideally: sounds good on paper….but in reality…..
►When these revolutions took place, the governments that emerged became harsh dictatorships……when the idea was to allow the people to control all…..
►The government never released their control….
►The governments became a ruling class with total control over politics and economics
►All others were left to be subject to govt. control
►Some countries still run strict govt controlled states (politics and economics)
►= North Korea and Cuba ►Others have strict political control but
have allowed many free market systems to be established to allow for more economic growth …= China