Economic System

Dynamic pricing (yield management or revenue management) is a price discriminating method where customers are divided into two or more groups, and each group is charged a different price for goods or services are similar. Resources prices are adapted according to the demand function and the demand which is currently prevailing. It is pricing system that sellers will use and will be based on the customer’s behavior to yield maximum revenue.

Recently, dynamic pricing has become prevalent with internet retailers and in the airline industry. In a survey (McFee and Velde) American Airlines has about half a million different prices per day. The pricing method will be successful where two conditions coexist. One that the product or service in question will expire at a specific time and two the capacity is fixed.

The airline industries such as American Airlines will apply dynamic pricing by charging different prices for refundable and nonrefundable tickets, the timing of the flight, if it’s a business or leisure flight and even offering different prices depending on the origin of the customer (for example, different prices to and from Los Angeles to Phoenix will vary depending on whether the customer is from Los Angeles or from Phoenix).

Dynamic pricing has the benefit of optimizing revenue since pricing is flexible. Prices are not fixed and if demand is high, a company will increase the prices, if demand goes down, the company will reduce the prices accordingly. The method has the advantage of forewarning the management on the market trend and act accordingly.

One of the disadvantages of dynamic pricing is the unpredictability and lack of comfort in knowing that a product will be bought at a certain fixed price and therefore it would be easier to predict and budget on these sales predictions. Again, for optimum success, the success of dynamic pricing requires expensive software.

Dynamic pricing is the modern way of maximizing revenue. Profitability of a company should not be affected by the forces of supply and demand. It is the responsibility of the management to work out on prices that yield maximum profits during different market seasons.

Supply and demand is the relationship between the availability of the product and how many customers are available to purchase the products. Suppliers will base their prices on the demand of the product and the availability of suppliers for the same product. Thus, if there are several suppliers for the same commodity, suppliers will fight to gain the customers by offering lower prices. Again, when demand for the commodity goes up and the supply remains constant, the suppliers will increase the price of the commodity, thus adjusting the prices to the law of supply of demand. Thus, price becomes a reflection of demand and supply.

According to the law of demand, while all other factors being constant, if the price of the product goes up, fewer customers will buy the product, thus demand goes down. This is because the consumers will consider the opportunity cost of buying the product at a higher price and decide if it is worth giving up the alternative item or buy this particular product. The relationship between demand and price is said to be negative as the higher the price increases, the lower the demand for the product. The law of supply on the other hand states that if the prices of products are high then the supply is high as well.

When the price goes up the suppliers will supply more in order to earn more from these suppliers, thus the relationship between the supplier and price is said to be positive. However, the suppliers will have to act quickly before the market becomes overcrowded with the supply, adjusting the prices downwards. This happens when the supply exceeds the demand for the product; the supplier will have to adjust the price downwards to compete for the customers. All other factors being constant, the laws of supply and demand will meet at an equilibrium point, where the demand and supply are equal. At this point, suppliers are selling all their products and consumers get the goods that they need.

In applying the rules of supply and demand organizations will base their production on the demand. The management in organizations should be active in maximizing profitability with minimal costs and proper utilization of the available resources. It would be uneconomical to produce goods that will not be sold immediately as this will lead to tied up capital. Tying up capital has negative effects as the cash spent on the inventory and production costs can be reinvested in another area within the organization. There are other costs that are also incurred on overproduction including storage costs and insurance costs.

The demand and supply strategy in determining prices and production assumes that unmet demand will be lost, there is limited production capacity and sales are discretionary (Chan, Levi and Swann, 2001). The strategy recognizes the importance of inventory in determining the price of an item. The managers will delay the production and the pricing of the product until when there is demand for the product. Delayed Production and Pricing work in such a way that the production and the pricing will be decided upon at the start of the period where customers start to demand and when their orders have been received. This is demand-based pricing strategy.

Demand-based pricing strategy is based on the consumer behavior and how much value they put on the product (Berends, 2004). The managers will select the best strategy which will also depend on their products. There products which are in demand throughout the year, while others will have low and high seasons. For the goods that are all season, the demand for the product is almost similar throughout the year. Production is easy to predict by comparing the demand for several periods and considering other factors like competition and the quality of the products.

For products whose demand is seasonal, managers can use the partial planning models (Chan, Levi and Swann, 2001) where decisions are made at the start of the season. This will use the forecasted demand for the product, and if there is any product that is left over, it can be used as sale for the next period or to make part of sales during the low season. Depending on the durability of the product, production can be maximized during the low season. This will have the advantage of reducing production costs which may be higher during the high season as skilled labor and raw materials will be on higher demand and cost may be higher then. This is mass market pricing (Berends, 2004) where standard products are produced in high volumes.

In delayed and partial pricing methods, prices are determined at each period and this will be determined by the production cost which in turn will be determined by the inventory that was brought forward from the prior season, the current cost of inventory, the labor costs plus the profit margin that has been set by the management.

In conclusion, it is up to the management to decide the strategy that will maximize on profits at all seasons. When the demand for a product is high, the prices and production can be adjusted to meet the demand and maximize on sales at this particular season. Sales can also be maximized during the low seasons by adjusting the prices downwards.

An economic system is a system for producing, distributing and consuming goods and services, including the combination of the various institutions, agencies, consumers, entities (or even sectors as described by some authors) that comprise the economic structure of a given society or community. It also includes how these various agencies and institutions are linked to one another, how information flows between them, and the social relations within the system (including property rights and the structure of management).

It is an organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economic system is comprised of the various processes of organizing and motivating labor, producing, distributing, and circulating of the fruits of human labor, including products and services, consumer goods, machines, tools, and other technology used as inputs to future production, and the infrastructure within and through which production, distribution, and circulation occurs.

These processes are determined by the political, cultural, and environmental conditions within which they come to exist. The economic system involves investments, production, the allocation of economic inputs, distribution of economic outputs, land availability, households (earnings and expenditure consumption of goods and services in an economy), financial institutions and government policies. It involves a set of institutions and their various social relations.

Alternatively, it is the set of principles by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources. An economic system is composed of people, institutions, rules, ND relationships, for example, the convention of property, the institution of government, or the employee-employer relationship. Today the dominant form of economic organization at the global level is based on capitalist mixed economies. Societies have developed different broad economic approaches to manage their resources.

Economists generally recognize four basic types of economic systems? traditional, command, market, and mixed. A traditional economic system is shaped by tradition. The work that people do, the goods and services they provide, how they use and exchange resource, etc. , all tend to follow long-established patterns. These economic systems are not very dynamic? things don’t change very much. Standards of living are static; individuals don’t enjoy much financial or occupational mobility.

But economic behaviors and relationships Economic Systems By Lillian what to expect from others. In many traditional economies, community interests take precedence over the individual. Individuals may be expected to combine their efforts and share equally in the proceeds of their labor. In other traditional economies, some sort of private property is respected, but it is restrained by a strong set of obligations that individuals owe to their community. No general rule exists for determining who has power within a group of people connected by kinship relationships.

However, patriarchy, age, and birth order often play a role in determining status among those living within a particular kinship production unit. In particular, it is often the case that if one is male, if one is older, and if one is the first born to someone who currently has a position of power, then one is more likely to achieve greater power within the family and, so, within the economy in kinship production. In traditional economic system the “economy’ is not a separate sphere of society that operates according to its own logic.

Instead, economic activities are subordinated to power relationships, customs, and traditions that developed within the group of people connected by kinship connections. The other aspects of family life?child rearing, networks of loving relationships, religious beliefs, and so on?are not necessarily subordinated to the economic aspects of family production. Indeed, these other aspects can dominate the economic aspects of family life. Through most of history, traditional economic systems aimed to achieve survival of the kinship group.

That is, production within this economic system aimed to meet the Asia needs for food, shelter, and clothing by the production of all these things within the production unit. Most often, the production unit did not rely on outsiders for the production of basic needs. Further, through most of history notions of earning a profit were foreign to this economic system. Production was for use within the family rather than for sale to outsiders make a profit. Exchange?or trade?is generally unimportant within the kinship production unit.

Goods and services are transferred among members of the production unit, but most of these transfers are not classified as exchanges. For instance, many transfers are best seen as gifts made not with the intent of getting something in return but because of family obligation or, indeed, love. Sometimes “reciprocal exchange” does occur, in which what is given today creates a social obligation by the recipient to provide something back to the giver in the future. These gifts and reciprocal exchanges, however, are not necessary parts of the traditional economic.

Today you can find traditional economic systems at work among Australian aborigines, Intuit or those of the tea plantations in south India, and some isolated tribes in the Amazon. In the past, they could be found everywhere?in the feudal In a command economic system or planned economy, the government controls the economy. The state decides how to use and distribute resources. The government regulates prices and wages; it may even determine what sorts of work individuals do. Socialism is a type of command economic system.

Historically, the government has assumed varying degrees of control over the economy in socialist countries. In some, only major industries have been subjected to government management; in others, the government has exercised far more extensive control over the economy. A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency. A planned economy may be based on either centralized or decentralized forms of economic planning, but usually refers to a centrally-planned economy.

The goal of central planning is to enable planners to take advantage of more perfect information through a consolidation of economic resources when making decisions regarding investment and the allocation of economic inputs within production. In an entirely centrally-planned economy, a universal survey of human needs and consumer wants is required before a comprehensive plan for production can be formulated. The public body responsible for production and resource allocation would require the power to allocate factors of production in order to fulfill the plan, and for overseeing the distribution system of the economy.

The most extensive form of a planned economy is referred to as a command economy, centrally planned economy, or command and control economy. In such economies, central economic planning by the state or government directs all major sectors of the economy and roommates decisions about the use of economic inputs and the means of production. Planners would decide what would be produced and would direct lower-level enterprises and ministries to produce those goods in accordance with national and social objectives.

Planned economies are held in contrast to unplanned economies, such as the market economy and proposed self-managed economy, where production, distribution, pricing, and investment decisions are made by autonomous firms based upon their individual interests rather than upon a macroeconomic plan. Less extensive forms of planned economies include those that use indicative landing as components of a market-based or mixed economy, in which the state employs “influence, subsidies, grants, and taxes, but does not compel. Advantages The government can harness land, labor, and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without asses when the government forced the share of GNP dedicated to private institution from eighty percent to fifty percent.

As a result, the Soviet Union experienced massive growth in heavy industry. Disadvantages of economic planning Inefficient resource distribution: surplus and shortage. Critics of planned economies argue that planners cannot detect consumer preferences, shortages, and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). This difficulty was notably written about by economists Ludwig von Misses and Frederica Hayes, both of whom called it the economic calculation problem”.

These opponents of central planning argue that the only way to determine what society actually wants is by allowing private enterprise to use their resources in competing to meet the needs of consumers, rather those taking resources away and allowing government to direct investment without responding to market signals. According to Tabor R. Mach, “Without a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals. “

Suppression of economic democracy and self-management Economist Robin Hannah notes that, even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and Just than mainstream notions of economic freedom. Says Hannah, “Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better.

But they could never have delivered economic self- management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways.

But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power. ” The classic (failed) example of a command economy was the communist Soviet Union. The collapse of the communist bloc in the late asses led to the demise of many Belabors, and Burma continues to hold on to its planned economy even today.

A market economy is an economy in which decisions regarding investment, production and distribution are based on supply and demand, and the prices of goods and services are determined in a free price system. This is contrasted with a landed economy, where investment and production decisions are embodied in a plan of production. Market economies can range from hypothetical laissez-fairer and free market variants, to regulated markets and interventionist variants. Most existing market economies include a degree of economic planning or state-directed activity, and are thus classified as mixed economies.

In the real world, market economies do not exist in pure form, as societies and governments regulate them to varying degrees rather than allow full self-regulation by market forces. The term free-market economy is sometimes used synonymously tit market economy, but, as Ludwig Reheard once pointed out, this does not preclude an economy from providing various social welfare programs such as unemployment benefits, as in the case of the social market economy. In market economies, economic decisions are made by individuals.

The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resources?what training to pursue, what Jobs to take, what goods or services to produce. And individuals decide what to consume. Within a pure market economy the government is entirely absent from economic affairs. A market economy is a system where the market is believed to be crucial. Demand creates supply and the market largely finds its own level and is self-regulating.

The state adopts a laissez-fairer approach and gets involved as little as possible. Shareholders and private companies are the powerhouses of the economy. In its pure form, this system would be extreme with, for instance, little or no state help for people who are unemployed or homeless. In market economy two primary classes exist: “employees” and “employers. Employees (also called “workers”) are the subordinate class. They are the direct producers who generate the surplus that goes to the employers. They often have little power in the social and political world.

Employers (also called “capitalists”) are the dominant class: they receive the surplus and decide what to do with it. Employers are both the dominant class in the economy. They are also generally dominant in social and political matters within their country. Market economy exists when an economic system meets all four of the following criteria: Products are produced as commodities, Ђ Private ownership of capital goods used in production exists and is narrowly distributed in the population, and Wage labor is used in production.

In market system, products are made only if they bring profit to the owner of the firm. If buyers need a product, but the owner does not earn the profit he desires, the firm will not sell the good. A profit is earned if the revenue from selling these commodities is greater than the wages paid and the cost of materials and machinery used up. This profit is surplus: it is what workers produce above and beyond that necessary to pay their wages. Thus, the worker-capitalist relationship is a class relationship.

In market system, the capital goods (machines, buildings, tools) are owned by capitalists. The proportion of the population in a capitalist economy who has meaningful control over the economy’s capital goods is small. Although indirect ownership of capital goods (via ownership of stocks and/or mutual funds) might appear to be relatively widespread, very few people in society are able to live off their ownership of capital goods. Most people in a market system economy can survive only by engaging in wage labor.

Wage labor is also called the “employer-employee legislations. ” It exists when direct producers own themselves (unlike in slavery) but hire themselves out to capitalists in order to earn a wage or salary. Employees do not have sufficient access to income apart from employment to allow them to live even modestly?employees are not independently wealthy. Once employed, the employee enters a place of work in which the employer has almost all the power. The employer has almost one-sided power within the firm.

The only limits are those set by labor contracts (if one exists within the firm) or by law (which places few limits on the actions of business owners). Robin Hannah and Michael Albert claim that “markets inherently produce class division. ” Albert states that even if everyone started out with a balanced Job complex (doing a mix of roles of varying creativity, responsibility and empowerment) in a market economy, class divisions would arise. The United States in the late nineteenth century was about as close as we’ve seen to a pure market economy in modern practice.

A mixed economic system combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources. Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, and many mixed economies feature a variety of government-run enterprises and governmental provision of public goods. Ender private ownership; that markets remain the dominant form of economic coordination; and that profit-seeking enterprises and the accumulation of capital main the fundamental driving force behind economic activity. However, unlike a free-market economy, the government would wield considerable indirect influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism’s tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare.

Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors. There is not one single definition for a mixed economy, but the definitions always involve a degree of private economic freedom mixed with a degree of government regulation of markets. The relative strength or weakness of each component in the national economy can vary greatly between countries.

The term is also used to describe the economies of countries which are referred to as welfare states, such as the Nordic countries. Governments in mixed economies often provide environmental protection, maintenance of employment standards, a standardized welfare system, and maintenance of competition. As an economic ideal, mixed economies are supported by people of various political recursions, typically centre-left and centre-right, such as social democrats or Christian democrats.

Mixed economies were also promoted by fascists in the form of corporatism, involving a tripartite arrangement between labor, business and the state for the purposes of diminishing class-conflict and unifying the national economy through class collaboration for the purposes of national unity. Supporters view mixed economies as a compromise between state socialism and free-market capitalism that is superior in net effect to either of those. A mixed economy is a more common economic system. It is where the market economy is given a fairly free rein, but the government will intervene sometimes in some areas.

So, some elements of the economy will be managed, and there will be some regulation of the excesses of the market. The state will intervene in specific areas, such as health, safety and employment law. A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics.

The term mixed economy is used to describe economic systems which stray from the ideals of either the market, or various planned economies, and “mix” with elements of each other. As most political-economic ideologies are defined in an idealized sense, what is described rarely if ever exists in practice. Most would not consider it unreasonable to label an economy that, while not being a perfect representation, However, when a system in question diverges to a significant extent from an idealized economic model or ideology, the task of identifying it can become problematic.

1. Describe the economic system known as the American System.
2. Describe the changes that took place in American politics during the first decades of the asses, and explain reasons for these changes. “American System was a program for economic development (Manager, R. 2012). ” With the way that America was changing you had a younger generation that was eager for change as well. American politicians had gained a better trust from the people.

Henry Clay and John Calhoun two Democratic-Republicans had embraced Jefferson vision for a small federal government. “Together, they advanced a vision hat the federal government should encourage economic enterprise by internal improvements, develop a secure economic institution, and provide for the security of America’s economic interests (www. betheluniversityonline. Net, 2012). ” Internal improvements would be the building of roads and canals. Congress refused to help the First National Bank before the war it caused many banks to be created.

These various banks created their own currency and credit, which caused lots of problems. Part of the American System was the creation of the Second Bank of the United States. “Calhoun and Clay also supervised the passage of the Tariff of 1816, which axed all incoming goods at the stiff rate of 25 percent (www. betheluniversityonline. Net, 2012). ” This would limit the amount of foreign goods coming to the United states and encourage growth and development within America.

Reference:

1. Schultz, K. Whist, Volume 1, History of the United States l, Bethel University Online HTTPS://www. betheluniversityonline. Net/caps/Commemorations. Asps? Sectioned=254 Manager, Robert, September 27, 2012, American System (Economic Ideas Advanced by Henry Clay), About. Com Guide, http://historicity’s. About. Com/odd/glossary’s/g/ Americanism. HTML In 1819 the United States had actually experienced its first major economic depression. This brought about change during the next two decades.

A new kind of Economic System known as the American System By street that the government should be more responsive to their needs; the expansion of the franchise, or vote, allowed greater numbers of American men to participate in politics; the contentious presidential election of 1824 led the entire nation to become increasingly political, which drove the rise of mass parties and the second two-party system (www. betheluniversityonline. Net, 2012). ” There was a push for the government allowing more freedom to the people in the political process.

Prior to the revolution the voting was limited to the elite white people who were valued property owners. By 1824 voting rights had been extended to allow every free white man with restrictions only in a select few states. There was still a good bit of racism in the north and it still kept the African Americans from being able to vote. “The world of politics was becoming more democratic, and more people were allowed to participate, but it still maintained significant limits to participation (www. betheluniversityonline. Net, 2012). ” Change would be seen from the elections of 1824.

The change would be that you would only have politicians considered to be Democratic-Republicans since the Federalists Party had dissolved around 1810. With the election of 1824 and no clear majority candidate the House of Representatives would select the next president. Henry Clay had lost his bid for president and threw his support behind John Quince Adams. The House appointed John Quince Adams as the president of the United States. “Alleged deal between John Quince Adams and Henry Clay to manipulate the voting in the House of Representatives to install Adams as president and Clay as his secretary was seen as a corrupt bargain (www. Telecommunications. Net, 2012). ” The corrupt bargain caused a stronger interest in politics and had a huge affect on voter tuner in later years. The election of 1828 would bring about an even greater change in American politics. The style in which a person would campaign changed dramatically. The introduction of leaflets and public speeches would lead to more successful campaigns. “The election of 1828 signaled the beginning of the kind of political culture that persists in America today (www. betheluniversityonline. Net, 2012). “

Capitalism

Under a capitalist economic system, individuals own all resources, both human and non-human. Governments intervene only minimally in the operation of markets, primarily to protect the private property rights of individuals. Free markets in which suppliers and demanders can enter and exit the market at their own discretion are fundamental to the capitalist economic system. The concept of laissez-fairer, that is, leaving the coordination of individuals’ wants to be controlled by the market, is also a tenet of capitalism.

In a capitalist system, individuals own resources, either through inheritance or through industry. The individual receives compensation for the use of resources by others. This, combined with inherited wealth of the person, determines an individual’s spending power. The accumulated spending power and the willingness of individuals to allocate resources to consumption determine demand. The availability and costs of resources, together with the potential for profits of firms, determine supply. In a market system the demand of consumers combined with the supply of producers determine what and how much will be produced.

Socialism

Under a socialist economic system, individuals own their own human capital and the government owns most other, non-human resources that is, most of the major factors of production are owned by the state. Land, factories, and major machinery are publicly owned. A socialist system is a form of command economy in which prices and production are set by the state. The movement of resources, including the movement of labor, is strictly controlled. Resources can only move in the direction of the centralized planning authority. Economic decisions about what and how much, how, ND for whom are all made by the state through its central planning agencies.

Communism

Under a communist economic system, all resources, both human and non-human, are owned by the state. The government takes on a central planning role directing both production and consumption in a socially desirable manner. Central planners forecast a socially beneficial future and determine the production needed to obtain that outcome. The central planners make all decisions, guided by what they believe to be good for the country.

The central planners also allocate the production to nonusers based on their assessment of the individual’s need. Basic human needs and wants would be met according to the Marxist principle, “From each according to his ability to produce, to each according to his need. ” Market prong capitalism o economizing Panamanian – nag Callahan Eng bat ‘sang ASPI Eng albumin an magnesia cool as gung anon nag assigning abominating laying Para as Kantian, at as pigtail Eng mechanism Eng pressing sisters billing taiga-gunny Eng albumin.  Command communism; matricidal an socialism o economizing outs-nag- Abigail din as publishing page-air Eng mega Kandahar, at as central an pagination pang-economies Eng governs billing mechanism as page-Augean Dahl Economic Systems By invariant albumin o economies ay Managua an mass mailing kite at pageantry-panty says as Malagasy mega papayas Eng bat Sis. Haloing economies – NASA citing Eng capitalism at communism. Capitalism – ay sang Kananga bankruptcy. Tit ay Nikolas as Panamanian Eng gargling pajamas-air at paginations.

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Fascism

A system of government marked by centralization of authority under a dictator, stringent socioeconomic controls, suppression of the opposition through terror and censorship, and typically a policy of belligerent nationalism and racism. B. A political philosophy or movement based on or advocating such a system of government. Oppressive, dictatorial control.  An economic doctrine that opposes governmental regulation of or interference in amerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws.  Noninterference in the affairs of others. Free enterprise economy or system, which allows any individual or group of people to start and operate a business with minimal government regulation or interference, according to the Federal Reserve Bank of Dallas. Free enterprise economies allow people to be creative and productive on their own volition, unlike other market economies, such as socialist or communist economies.

There is more than one way for an economy to organize its economy. The government may decide what’s best or the government might stay out of it, leaving the economic system- structure of methods and principles that a society uses to produce and distribute goods and services- to be determined by the combined decisions of millions of individual people. Economic system is defined as how a society chooses to produce, distribute, and consume goods and services. Since resources are scarce and not always available each society must determine three important factors when determining their economic system.

These factors are how the goods will be produced, who will produce these goods, and for whom these goods will be produced for. Society must use the resources they have available for the allocation of these goods. Because each society is different and does not produce, distribute, or consume the same goods and services, each society in the economic system is categorized into four different types of economies. These economies are known as traditional, market, command, or mixed economies. Traditional economy is shaped mainly by traditions, customs, and beliefs of the community.

In a market economy decisions are determined by a free market. A command economy is an economy controlled by the government who regulates the supply and prices of the goods and services produced. The mixed economy is where both the private sector and the government make the decisions on what goods and services are produced, how they will be produced, and who will produce them. One type of the economic system is the traditional economy. In a traditional economy goods and services are developed based on the traditions, customs, and beliefs of the society.

This type of economy is an underdeveloped economy because of the use f primitive tools and methods the society uses to produce these goods and services. Most traditional economies use hunting and fishing to sustain their community and produce very little surplus of goods. If any society does have a surplus of goods these are often given to the landowner or a person of higher authority. This resulting is minimal economic growth. Traditional economies are found in rural regions and are industrialized. Most of these regions are located in the third world regions of Africa, Asia, Latin America, and the Middle East.

Traditional economies answer the questions of what goods and services are reduced, how these goods and services will be produced, and who will consume these goods and services by the traditions, customs, and beliefs of the community. Traditions are usually formed and remain unchanged, therefore offering little opportunity for growth. Goods and services produced in this type of economy are usually hunting, fishing, and ones that can be produced using the land available (Madame). In this society every person has a specific Job to do for the production of these goods and services.

The amount they produce is only enough to keep their society alive. They do not produce for growth or wealth. Money is not needed in this economy because these societies use barter and trade for the distribution of their Economic Systems By scuppers There are two levels of traditional economies, basic and next. In the basic level the society is nomadic and lives in families or tribes. Most cover a large area and usually follow the animals to find food. They move to follow the weather. In the next level , the society will find land and become farmers where they are able to plant and grow food to sustain them.

They are able to support more people in the society and build moms to live in. Here they can trade and barter good and services instead of competing for them. A true traditional economy does not exist in today’s society, although there are many in third world countries that could be considered traditional economies. This is because most live in poverty with no means of escaping it. War and disease often destroy these societies. They are most vulnerable to the weather and have little means of protecting themselves from others.

Examples of a traditional economy would be the Intuit tribes in northern Canada and the Same reindeer hunters in Scandinavia. Both of these societies use hunting and bartering to sustain their needs. They only hunt and produce what is necessary for their survival. A market economy is another type of the economic system. In this economy, the decisions of what goods and services are produced, how these goods and services are produced, and who will consume these goods and services are determined by the free market. This basically means that both supply and demand determine the production of goods and services.

It also mandates the price set for the goods and service and who will consume these goods and services. Producers can sell their goods and services at the highest price the consumer is willing and able to spend for those goods and services. Workers are also able to bid their services and wages to the highest bidder based on their skill level and education. There are six characteristics of a market economy. They are private property, freedom of choice, motive of self-interest, competition, system of markets and prices, and limited government.

The characteristic of private property entitles owners to rent, sale, lease, and transfer their goods and services through legally binding agreements. Since most goods and services are owned this gives the property owner the right to benefit from the sale and use of this property. The only thing you can not sale or purchase is yourself and other people or any body parts. Freedom of choice says any worker, business, consumer, and owner can produce, sell, or purchase good and services in the free market. This is determined by the amount they are willing to pay for those goods and services and the amount of money or capital they have available.

Motive of self- interest another characteristic. Here producers try to sell their goods and services to he highest bidder while the consumer attempts to buy those goods and services at the lowest possible price. Another characteristic is competition. Competition keeps prices level. As the supply for goods and services increase the demand for that item decreases, but as demand for the item increases the supply for those goods and consumer and producer the best product available at the best price. The system of market and prices is a characteristic in which prices increase and decrease based only on the law of supply and demand.

The last characteristic of a market economy is limited government. Here the government’s involvement is to ensure the markets are open and operating. It also uses it’s ability to defend so no other nation or country can destroy the market. There are several advantages of a free market economy. One advantage is competition. Competition allows producers/sellers to compete among each other to sell their products for the best price. Many employees of businesses would have an incentive to work harder if their Jobs were on the line.

Another advantage would be that sellers can decide what they want to sell and where they want to send it, unlike the command economy. Another would be foreign investment. Foreign investment is attracted to people from other countries when they hear of Job opportunities here in the United States. The factors of production would undergo drastic changes. “Many people quickly acquire the technical and social skills and knowledge needed to function in this new economy’ (Oilman). There are also disadvantages of a free market economy. In a market economy, there is often an overabundance of goods being produced, especially when a new fad comes about.

Often, “there is growing inequality from the social and economical inequality (the rich get richer and everyone else gets poorer, many absolutely and the rest in relation to the rapidly growing wealth of the rich)” (Oilman). A command economy, also known as a centrally planned economy, is another type of economic system. Command economies operate in complete difference to market economies. Command economies oppose free market pricing, competition, consumer choice, etc. In command economies, the government controls all decisions that have to be made. A central bureaucracy decides what items to produce, how to produce them, and who gets them” (Sullivan). The government tells producers what they can and cannot produce, how gets the products, and how many products will be made. Terms that are often linked to central planning are socialism and communism. Though often used interchangeably, the terms actually describe completely different systems. Socialism is not a single economic system, but a range of economic and political systems based on the belief that wealth should be evenly distributed throughout society (Oilman).

Communism, on the other hand, the central government owns and controls all resources and means of production and makes all economic sections (Oilman). Karl Marx, the 19th century father of communism, was outraged by the growing gap between rich and poor. “He saw capitalism as an outmoded economic system that exploited workers, which would eventually rise against the rich because the poor were so unfairly treated. Marx thought that the economic system of communism and all property should be publicly owned and that people should be paid on their abilities and needs. Socialism in a sense is Just alike communism.

They both believe that wealth should be shared more equally among the people and that the common people, people in mineral, should be make the major choices of the government (casuistry. Org). Socialists argue that workers should not be overthrown, like communists say. Socialism is a social state between the overthrow of capitalism and the realization of communism. There are several disadvantages of a command economy, such as: economic efficiency, economic freedom, economic growth, and economic equity. Command economies don’t have economic efficiency since the government owns all production factors and controls the wages.

If workers are paid low, then they don’t have the incentive the work faster or improve their working abilities. Economic freedom is also not available in a sense that command economies often have to sacrifice individual freedoms to pursue social goals. Command economies discourage change, so there is no way that they will be able to receive economic growth. “A major goal of communism is to increase economic equity by distributing goods and services fairly. Such equity has been proven very rare” (casuistry. Org). Often the ordinary people are suffering and the upper class people are receiving the wider variety of goods.

The disadvantages of command economies have forced leaders in many countries to move themselves from command economies over to mixed economies (Sullivan). The last economic system is a mixed economy. A mixed economy is a combination of market, command and traditional economies. In mixed economies the government is involved to some extent. “A mixed economy seeks to have all the advantages of a market, command and traditional economy with little of the disadvantages” (Madame- Mixed). “Most mixed economies have three of the six characteristics of the market economy: private property, pricing and individual self-interest”(Madame-Mixed).

Private property is property that is owned by individuals or companies, not by the government or the people as a whole. “The Fifth and Fourteenth amendments to the Constitution protect private property by declaring that no person may be deprived of “life, liberty, or property, without due process of law. ” “(Sullivan). Pricing is determined by the supply and demand of goods and services. Prices, in turn, tell businesses what to produce; if people want more of a particular good than the economy is producing, the price of the good rises.

That catches the attention of new r other companies that, are sensing an opportunity to earn profits, start producing more of that good. On the other hand, if people want less of the good, prices fall and less competitive producers either go out of business or start producing different goods. Finally, self-interest is the motivating force in the free market– the push that leads people to act on. Mixed economies also have a command economy in certain areas. Most allow includes the military, international trade, and national transportation (Madame- Mixed). An increased governmental role depends on the priorities of the people.

Some mixed economies encourage the government to centrally manage health care, welfare, and retirement programs. Governments nearly ban all imports from other countries, and “production of foreign goods and services are forbidden” (Sullivan). A mixed economy can enjoy the advantages of a market economy. “First, they can efficiently allocate goods and services where they are needed, by allowing prices to measure supply and demand” (Khan). Secondly, they can enjoy a high level of economic freedom. Foreign investment is also encouraged, unlike that in command economies.

Thirdly, private property is protected by the government, and only interfere with establishing wages and price control on rent. “Fourth, it automatically allocates capital to the most innovative and efficient producers” (Khan). There are many ways for an economy to organize its economy. Economic system is defined as how a society chooses to produce, distribute, and consume goods and services. Since resources are scarce, economies must ask three important questions to determine how resources are to be distributed. Those three questions would be: What goods and services should be produced?

How should these goods and services be produced? And Who consumes theses goods and services?. Because each society is different and does not produce, distribute, or consume the same goods and services, each society in the economic system is categorized into four different types of economies. These economies are known as traditional, market, command, or mixed economies. All these economies have their similarities and differences, but they have helped shape our country and world as a whole. The most common economy would be a mixed economy and its a combination of traditional, command, and free market economy.

Comparative Economic Systems Student Name: Samara Registration Number: 304-0911010 Program: Thesis topic: Bachelor of Business Administration-Finance Submission Date: Signature Thesis Supervisor Approval: Name: Designation: Signature: Uninominal Khan Lecturer/Thesis Supervisor Department Approval: Head of Department: Abstract Mural Amassed Nazi This research is done based on the secondary data. The major source of information for the research work has been internet. Further information has been extracted from text books, magazines and Journals.

The research topic is belonging to the field f Macroeconomics and is a broad issue for discussion. This research will identify the major arguments and definitions on each of the economic systems and will finally conclude what system is more advantageous. The research will also discuss sub- systems and combinations in the economic systems and will compare the pros and cons of deferent economic systems. Acknowledgement I feel proud in expressing my deepest sense of gratitude to the Jordan University where I learned a lot and received a lot of kindness and professional behavior from all the lecturers and the academic members.

I am thankful to the leadership of Jordan University and the head of faculty of management sciences who really supported the students throughout the course. Special thanks goes to Sir Uninominal Khan, my supervisor for Thesis project and one of the very professional senior lecturers of Jordan University; His scholastic, consistent advice, encouraging behavior, valuable suggestion, personal interest and dynamic supervision enabled me to complete the present project. This research work was hard to be accomplished without his cooperation. I am extremely thankful to my parents whose help and good wishes made this project a success.

Comparative economic systems analysis has become consolidated as a discipline which compares the deferent economic systems, using and integrating theoretical, institutional, and empirical analyses. However, since socialist economies collapsed in the U. S. S. R and Eastern Europe, a new research agenda has been added to this area: theoretical and empirical analysis of transition economies. Also, the advanced capitalist economies have witnessed different trajectories of development, reflecting diversified institutional evolution of corporate governance and employer-employee relationships.

Although the socialist regimes have all collapsed, it remains to be seen n which direction the capitalist regimes, and the economies in transition, will develop. Given this situation, the research section on comparative economic systems seeks to analyze difference between capitalist, socialist, feudalism and transitional economies, to highlight the diversity of capitalist economies, and to understand economic thoughts which underlie those different economic systems and their development. Http://www. Ire. Hit-u. AC.

Jp/English/introduction/ices. HTML Capitalism is an economic system in which capital assets are privately owned and teems are brought to market for profit. In a capitalist economy, the parties to a transaction determine the prices at which assets, goods, and services are exchanged. Central elements of capitalism include capital accumulation, competitive markets and wage labor. Capitalism has existed under many forms of government, in many different times, places, and cultures.

Following the demise of feudalism, capitalism became the dominant economic system in the Western world. Capitalism successfully overcame a challenge by communism and is now the dominant system worldwide. Economists, political economists, and historians have taken different perspectives in their analysis of capitalism and recognized various forms of it in practice. These include laissez-fairer capitalism, welfare capitalism and state capitalism, all characterizing varying levels of state power and public capital control.

A pejorative characterization, crony capitalism, refers to a state of affairs in which insider corruption, nepotism and cartels dominate the system. This is considered to be the normal state of mature capitalism in Marxian economics but as an aberrant state by advocates of capitalism. All such characterizations are subjective and tend to mark out a point of view either more or less sympathetic to attempts by voters to regulate business. Laissez-fairer economists emphasize the degree to which government does not have control over markets and the importance of property rights.

Others emphasize the need for government regulation, to prevent monopolies and to soften the effects of the boom and bust cycle. Most political economists emphasize private property as well, in addition to power relations, wage labor, class, and the uniqueness of capitalism as a historical formation. The extent to which different markets are free, as ell as the rules defining private property, is a matter of politics and policy. Many states have what are termed mixed economies, referring to the varying degree of planned and market-driven elements in an economic system.

Proponents of capitalism use historical precedent to claim that it is the greatest wealth-producing system known to man, and that its benefits are mainly to the ordinary person. Critics of capitalism associate it with economic instability and an inability to provide for the well-being of all people. The term capitalism, in its modern sense, is often attributed to Karl Marx. However, Marx was far more concerned with characterizing the sociological effects of capital economics.

The “ism” was used only twice in the more political interpretations of Mar’s work, which were primarily authored by Frederica Engel’s. In the 20th century defenders of the capitalist system often replaced the term capitalism with phrases such as free enterprise and private enterprise and replaced capitalist with reenter and investor in reaction to the negative connotations sometimes associated Witt capitalism. The author Any Rand attempted a positive moral defense of capitalism as such but in highly romantic or literary terms that did to stand logical or historical scrutiny.

By contrast modern welfare economics has produced a number of detailed defenses of the mixed capitalist economy based on public ownership of infrastructure and defense of positive human rights such as housing or education. Mammary Seen in particular, in Development as Freedom, his Nobel Prize winning work, outlined the reasoning by which many human societies have reached the common conclusion that mixed democratic capitalist economies with welfare systems were optimal to support human life.

Capitalism and capitalist economics is generally considered to be the opposite of socialism, which contrasts with all forms of capitalism in the following ways: social ownership of the means of production, where returns on the means of production accrue to society at large, and goods and services are produced directly for their utility (as opposed to being produced by profit-seeking businesses). Money, capital, and accumulation; Money is primarily a standardized medium of exchange, and final means of payment, that serves to measure the value of all goods and commodities in a standard of value.

It is an abstraction of economic value and medium of exchange that eliminates the cumbersome system of barter by separating he transactions involved in the exchange of products, thus greatly facilitating specialization and trade through encouraging the exchange of commodities. Capitalism involves the further abstraction of money into other exchangeable assets and the accumulation of money through ownership, exchange, interest and various other financial instruments. Capital in this sense refers to money used to buy something only in order to sell it again to realize a financial profit.

Capitalism is the system of raising, conserving and spending a set monetary value in a specified market. There are three main markets in a basic capitalistic economy: abort, goods and services, and financial. Labor markets (people) make products and get paid for work by the goods and services market (companies, firms, or corporations, etc. ) which then sells the products back to the laborers. However, both of the first two markets pay into and receive benefits from the financial market, which handles and regulates the actual money in the economic system. This includes banks, credit-unions, stock exchanges, etc.

From a monetary standpoint, governments control Just how much money is in circulation worldwide, which can play a role on how money is spent in one’s own country. Types of capitalism: There are many variants of capitalism in existence that differ according to country and region. They vary in their institutional makeup and by their economic policies. The common treasures among all the deterrent torts to capitalism is that they are based on the production of goods and services for profit, predominately market- based allocation of resources, and they are structured upon the accumulation of capital.

The major forms of capitalism are listed below: Mercantilism and Protectionism Mercantilism is a nationalist form of early capitalism that came into existence approximately in the late 16th century. It is characterized by the intertwining of national business interests to state-interest and imperialism, and consequently, the state apparatus is utilized to advance national business interests abroad. An example of this is colonists living in America who were only allowed to trade with and purchase goods from their respective mother countries (Britain, France, etc. ).

Mercantilism holds that the wealth of a nation is increased through a positive balance of trade with other nations, and corresponds to the phase of capitalist development called the Primitive accumulation of capital. Free-market capitalism Free-market capitalism refers to an economic system where prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy. It typically entails support for highly competitive markets, private ownership of productive enterprises.

Laissez-fairer is a more extensive form of free-market capitalism where the role of the state is limited to protecting property rights. Social market and Nordic model A social-market economy is a nominally free-market system where government intervention in price formation is kept to a minimum but the state provides significant services in the area of social security, unemployment benefits and recognition of labor rights through national collective bargaining arrangements. This model is prominent in Western and Northern European countries, albeit in slightly different configurations.

The vast majority of enterprises are privately owned in this economic model. Rhine capitalism refers to the contemporary model of capitalism and adaptation of the social market model that exists in continental Western Europe today. State capitalism State capitalism consists of state ownership of the means of production within a state, and the organization of state enterprises as commercial, profit-seeking businesses. The debate between proponents of private versus state capitalism is centered around questions of managerial efficacy, productive efficiency, and fair distribution of wealth.

Corporate capitalism Corporate capitalism is a free or mixed-market economy characterized by the dominance to hierarchical, bureaucratic corporations. State-monopoly capitalism was originally a Marxist concept referring to a form of corporate capitalism in which state logic is utilized to benefit and promote the interests of dominant or established corporations by shielding them from competitive pressures or by providing them with subsidies. According to the Oxford English Dictionary (ODE), the term capitalism was first used by novelist William Namespace Thacker in 1854 in The Newcomers, where he meant “having ownership of capital”.

Also according to the ODE, Carl Adolph Doodad, a German-American socialist and abolitionist, used the term private capitalism in 1863. SOCIALISM Socialism is an economic system characterized by social ownership of the means of reduction and co-operative management of the economy. “Social ownership” may refer to cooperative enterprises, common ownership, state ownership, citizen ownership of equity, or any combination of these. There are many varieties of socialism and there is no single definition encapsulating all of them.

They differ in the type of social ownership they advocate, the degree to which they rely on markets or planning, how management is to be organized within productive institutions, and the role of the state in constructing socialism. A socialist economic system consists of a system of production and distribution organized to directly satisfy economic demands and human needs, so that goods and services are produced directly for use instead of for private profit driven by the accumulation of capital. Accounting is based on physical quantities, a common physical magnitude, or a direct measure of labor-time in place of financial calculation.

Distribution is based on the principle to each according to his contribution. Marxist theory holds that the development of the socialist mode of production will give rise to a communist society, in which classes and the state are no longer present, there is access abundance to final goods, and thus distribution is eased on to each according to his need. As a political movement, socialism includes a diverse array of political philosophies, ranging from reformism to revolutionary socialism. Proponents of state socialism advocate the nationalization of the means of production, distribution and exchange as a strategy for implementing socialism.

In contrast, libertarian socialism opposes the use of state power to achieve such an arrangement, opposing both parliamentary politics and state ownership. Democratic socialism seeks to establish socialism through democratic processes and propagate its ideals within the context of a emigration political system. Modern socialism originated from an 18th-century intellectual and working class political movement that criticized the effects of industrialization and private property on society. In the early 19th-century, “socialism” referred to any concern for the social problems of capitalism irrespective of the solutions to those problems.

However, by e a e TNT-century, “socialism” and come to signing opposition to capitalism and advocacy for an alternative system based on some form of social ownership. Marxist expanded further on this, attributing scientific assessment and democratic Philosophy Socialists adhere to a diverse range of philosophical views. Marxian socialism is philosophically materialist as well as having at its centre a commitment to historical materialism. Many forms of socialist theory hold that human behavior is largely shaped by the social environment.

In particular, Marxism and socialists inspired by Marxist theory, holds that social mores, values, cultural traits and economic practices are social creations, and are not the result of an immutable natural law. The ultimate goal for Marxist socialists is the emancipation of labor from alienating work. Marxist argue that freeing the individual from the necessity of performing alienating work in order to receive goods would allow people to pursue their own interests and develop their own talents without being coerced into performing labor for others.

For Marxist, the stage of economic development in which this is possible, sometimes called full communism, is contingent upon advances in the productive capabilities of society. Socialists generally argue that capitalism concentrates power and wealth within a small segment of society that controls the means of production and derives TTS wealth through economic exploitation. This creates unequal social relations which fail to provide opportunities for every individual to maximize their potential, and does not utilize available technology and resources to their maximum potential in the interests of the public.

Socialist economy is that publicly owned, worker-run institutions produce goods and services in at least the commanding heights of the economy. Management and control over the activities of enterprises are based on self-management and self-governance, with equal power-relations in the workplace to maximize occupational autonomy. A socialist form of organization would eliminate controlling hierarchies so that only a hierarchy based on technical knowledge in the workplace remains. Every member would have decision-making power in the firm and would be able to participate in establishing its overall policy objectives.

The policies/goals would be carried out by the technical specialists that form the coordinating hierarchy of the firm, who would establish plans or directives for the work community to accomplish these goals. The role and use of money in a hypothetical socialist economy is a contested issue. Socialists including Karl Marx, Robert Owen, Pierre-Joseph Prudhoe and John Stuart Mill advocated various forms of labor vouchers or labor-credits, which like money would be used to acquire articles of consumption, but unlike money, they are unable to become capital and would not be used to allocate resources within the production process.

Bolshevik revolutionary Leon Trotsky argued that, following a socialist revolution, money could not be arbitrarily abolished. Money had to exhaust its “historic mission” (continue to be used until it became redundant), and then would be transformed into keeping receipts for statisticians, and only in the more distant future would it might not be required even for that role. Self-managed economy Decentralized planning and Workers’ self-management A sell-managed, decentralized economy is based upon autonomous sell-regulating economic units and a decentralized mechanism of resource allocation and decision- making.

This model has found support in notable classical and neoclassical economists including Alfred Marshall, John Stuart Mill and Corollas Vane. There are numerous variations of self-management, including labor-managed firms and rocker-managed firms. The goals of self-management are to eliminate exploitation and reduce alienation. State socialism State socialism can be used to classify any variety of socialist philosophies that advocates the ownership of the means of production by the state apparatus, either as a transitional stage between capitalism and socialism, or as an end-goal in itself.

Typically it refers to a form of technocratic management, whereby technical specialists administer or manage economic enterprises on behalf of society (and the public interest) instead of workers’ councils or workplace democracy. A state-directed economy may refer to a type of mixed economy consisting of public ownership over large industries, as promoted by various Social democratic political parties during the 20th century. This ideology influenced the policies of the British Labor Party during Clement Tattle’s administration.

In the biography of the 1945 UK Labor Party Prime Minister Clement Attlee, Francis Becket states: “the government… Wanted what would become known as a mixed economy”. Market socialism Market socialism consists of publicly owned or cooperatively owned enterprises operating in a market economy. It is a system that utilizes the market and monetary prices for the allocation and accounting of the means of production, thereby retaining the process of capital accumulation. The profit generated would be used to directly remunerate employees or finance public institutions.

In state-oriented forms of market socialism, in which state enterprises attempt to maximize profit, the profits can be used to fund government programs and services through a social dividend, eliminating or greatly diminishing the need for various forms of taxation that exist in capitalist systems. The neoclassical economist L©on Walrus believed that a socialist economy based on state ownership of land and natural resources would provide a means of public finance to make income taxes unnecessary. Yugoslavia implemented a market socialist economy based on cooperatives and worker self-management.

Libertarian socialism Libertarian socialism is a group of political philosophies that promote a non- hierarchical, non-bureaucratic society without private property in the means of production. Libertarian socialists believe in converting present-day private productive property into common or public goods, while retaining respect for personal property. Libertarian socialism is opposed to coercive forms of social organization. It promotes free association in place of government and opposes the social relations of capitalism, such as wage labor.

The term libertarian socialism is used by some socialists to differentiate their philosophy from state socialism, and by some as a synonym for left anarchism. Currents within libertarian socialism include Marxist tendencies such as left communism, council communism and autonomous, as well as non-Marxist movements such as social anarchism, Communism, Participial, and Inclusive Democracy. Democratic socialism Democratic socialism generally raters to any political movement that seeks to establish an economy based on economic democracy by and for the working class.

Democratic socialists oppose authoritarian “socialists” as Stalinist and Mastitis. Democratic socialism is difficult to define, and groups of scholars have radically different definitions for the term. Some definitions simply refer to all forms of socialism that follow an electoral, reformist or evolutionary path to socialism, rather than a revolutionary one. MIXED ECONOMY Mixed economy is an economic system in which both the state and private sector erect the economy, reflecting characteristics of both market economies and planned economies.

Most mixed economies can be described as market economies with strong regulatory oversight, and many mixed economies feature a variety of government-run enterprises and governmental provision of public goods. The basic idea of the mixed economy is that the means of production are mainly under private ownership; that markets remain the dominant form of economic coordination; and that profit-seeking enterprises and the accumulation of capital remain the fundamental driving force behind economic activity.

However, unlike a ere-market economy, the government would wield considerable indirect influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism’s tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare. Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors.

There is not one single definition for a mixed economy, but the definitions always involve a degree of private economic freedom mixed with a degree of government coagulation of markets. The relative strength or weakness of each component in the national economy can vary greatly between countries. Economies ranging from the United States to Cuba have been termed mixed economies. The term is also used to describe the economies of countries which are referred to as welfare states, such as the Nordic countries.

Governments in mixed economies often provide environmental protection, maintenance of employment standards, a standardized welfare system, and maintenance of competition. As an economic ideal, mixed economies are supported by people of various political recursions, typically centre-left and centre-right, such as social democrats or Christian democrats. Supporters view mixed economies as a compromise between state socialism and free-market capitalism that is superior in net effect to either of those.

Philosophy; The term “mixed economy” is used to describe economic systems which stray from the ideals of either the market, or various planned economies, and “mix” with elements of each other. As most political-economic ideologies are defined in an idealized sense, what is described rarely?if ever?exists in practice. Most would not consider it unreasonable to label an economy that, while not being a perfect representation, very closely resembles an ideal by applying the rubric that denominates that idea.

When a system in question, however, diverges to a significant extent from an idealized economic model or ideology, the task of identifying it can become problematic. Hence, the term “mixed economy” was coined. As it is unlikely that an economy will contain a perfectly even mix, mixed economies are usually noted as being skewed towards either private ownership or public ownership, toward fatalism or socialism, or toward a market economy or command economy in varying degrees. CHAPTER 3 METHODOLOGY This Chapter defines the methods chosen to conduct research on deferent economic systems.

The chapter will define the sources and the procedures for extracting information and the way the data is analyzed. It will further describe the limitations and shortages involved in this research. Procedure The data for this research has been mainly collected from the secondary source. The majority of data was extracted from reliable internet resources and was analyzed. The secondary data was used for the literature review of the research. The discussions were reviewed, summarized and rearranged in shorter and comprehensive sentences that comply with the level of this Thesis.

Scope of the study This research discusses a broad area of Macroeconomics. The boundaries are limited to all the economic systems. The research presents a comparative view of deferent economic systems and sub-systems, their advantages and disadvantages and it recommend the best system for Afghanistan scenario with sufficient reasons and justifications. Data collection tools The data was primarily extracted from internet sources. Extra information, quotes and moments have been extracted from the test books, magazines and Journals belonging to Macroeconomics.

The American life style has been very much shaped by their economy. Nearly all aspects of American, and for that matter the rest of the world”s, life have been changed by their economy”s in some way, shape or form. Everything from the beds we sleep on, to the food we eat, to the jobs we aquire to make ends meet is continuously shaped by the different economies each respective country has.

So what is quality of life anyway? There are probably a thousand different answers to that question, but they all point in the same direction. Quality of life means how happy you are with the lifestyle you have. Are you unhappy because you don”t have the belongings you want, or are you perfectly happy being without them, and believe in just enjoying life for what it is. Quality of life is a measure of your social, economic and mental well being.

Standard of living is something totally different from quality of life. Although they sound the same and the meanings of the separate words are similar, each phrase has it”s own meaning. The standard of your living may affect your standard of life though. Standard of living means the material possessions you have. It is the degree you are able to satisfy your material wants and needs.

First, to understand how the fact that the United States is a market economy affects the quality of life there, it helps for you to know some history on the subject. When the United States first started there was practically no secondary industry, this was because there hadn”t been a need for it before then. All the States did was “harvest” the raw goods from the land and sell them back to the mother country. There wasn”t any need to have any secondary industry. This all changed when they became a separate country. Later on when the British industrial revolution was about at it”s midriff the American revolution kicked in. this changed the secondary industry from a cottage based industry to a factory based industry with the introduction of machines that could do the work of several men. The farmers started to move out of the country and in to the big cities, where all the work was. Eli Whitney can be credited with the mass production of interchangeable parts.

Unfortunately, this system created a feeling of alienation. The workers in the the factorys were in a totally different social class than the managers. This gap along with the fact that they didn”t feel like they were part of the coroporation, a corporation acts as a single fictcios person, the workers didn”t feel like they were part of this person. The quality of life of the workers at these factories went down. They felt alienated at work, then they went home to poor housing conditions, malnutrition and virtually no social mobility. Although they weren”t nearly as bad as in Britain. The producers were happy though; they were making lots of money and more and better products than ever before.

This leads to the next issue of the relations between the labor force and management. This affects how people get the products, and how some people work, thus affecting the quality of life of many American citizens. Labor and management often have disagreements because the two groups have different views on how things should work. Management wants to keep production costs at a minimum, and therefore giving workers a low wage, while labor workers want high wages and lots of benefits for themselves. When the two groups have a disagreement and go into talks they try to find the answer to one simple question, “what should be the terms and conditions of employment?” and depending on their respective answers, they agree or disagree. These decisions determine the relationship of these two groups.

There are many risks in business, especially if you are the proprietor behind a proprietorship. This kind of business means you stand to lose or gain the most. If this fact is causing too much stress, your quality of life may “go through the floor.” But if you are the kind of person who values money very highly, your quality of life may go up when you have the knowledge that you may be able to make that much money. There are always ways to get around the risks of business; there are exemptions to every rule. There is always to lose too though.

Since the great depression, government has had much more to do with the economy than it used to. The government has much more to do with the American citizen”s life since the great depression. This bothers some people, but others like the security of being under the government”s protective wing. The government has decided to exert more controll because they want to limit the fluctuations of the business cycle. The government now makes laws and regulations to restrain the country. There are also many more social programs now, which some people couldn”t live without. These were developed because people were losing money and jobs over things which they didn”t have control over, like market fluctuations.

The consumer has a very important role in the economy, and so in there own standard of living, and even in there own quality of life. Some people are only happy when they have the material possessions, while others have no need of material things to make them happy. The people who need the possessions put a high regard to what the role of an American consumer is. Things like complaining when something is unsatisfactory, and becoming informed about which products to buy.

Every country has an economic system, and economic systems affect lifestyles, quality of lives, and standards of living. An economy can affect life much the way a climate can. In fact, an economy is actually a kind of climate. An economy can change, fluctuate and cause harm much the same way a weather climate can. The united states has used all levels of government and private enterprise to ensure an adequate quality of life for all of it”s citizens. The market economy is allowed to function by the government as long as it supports the common good, or quality of life.