Chapter 3 Section 2 Guided Reading and Review Political and Economic Systems Answers

System of ownership, production and exchange

An economic system, or economical society,^[1] is a system of production, resources allocation and distribution of goods and services inside a society or a given geographic area. It includes the combination of the diverse institutions, agencies, entities, decision-making processes and patterns of consumption that comprise the economic structure of a given customs.

An economic organisation is a type of social arrangement. The mode of production is a related concept.^[2] All economic systems must confront and solve the four fundamental economic issues:

What kinds and quantities of goods shall be produced.
How goods shall be produced.
How the output will be distributed.
When to produce.^[3]

The study of economic systems includes how these diverse agencies and institutions are linked to one some other, how information flows between them, and the social relations inside the organization (including property rights and the structure of management). The assay of economic systems traditionally focused on the dichotomies and comparisons between market place economies and planned economies and on the distinctions between capitalism and socialism.^[iv] Subsequently, the categorization of economic systems expanded to include other topics and models that do not conform to the traditional dichotomy.

Today the dominant form of economic organization at the world level is based on marketplace-oriented mixed economies.^[v] An economic organisation tin be considered a part of the social organisation and hierarchically equal to the law organization, political system, cultural and and so on. There is often a strong correlation betwixt certain ideologies, political systems and certain economical systems (for example, consider the meanings of the term "communism"). Many economic systems overlap each other in various areas (for instance, the term "mixed economy" can be argued to include elements from various systems). There are as well various mutually exclusive hierarchical categorizations.

Listing of economical systems [edit]

Resource based economy
Capitalism
Communism
Socialism
Feudalism
Distributism
Statism
Hydraulic despotism
Inclusive democracy
Marketplace economy
Mercantilism
Mutualism
Network economic system
Non-holding organization
Palace economic system
Participatory economic system
Potlatch
Progressive utilization theory (PROUTist economy)
Proprietism
Social Credit
Workers' self-management

Academic field of study [edit]

Economic systems is the category in the Periodical of Economic Literature classification codes that includes the study of such systems. One field that cuts across them is comparative economic systems, which includes the study of the following aspects of different systems:

Planning, coordination and reform.
Productive enterprises; factor and production markets; prices; population.
National income, production and expenditure; money; aggrandizement.
International trade, finance, investment and assistance.
Consumer economic science; welfare and poverty.
Operation and prospects.
Natural resources; free energy; environment; regional studies.
Political economy; legal institutions; property rights.^{[half dozen]}

Primary types [edit]

Capitalism [edit]

Commercialism generally features the private buying of the means of production (upper-case letter) and a market economy for coordination. Corporate capitalism refers to a capitalist marketplace characterized past the dominance of hierarchical, bureaucratic corporations.

Mercantilism was the dominant model in Western Europe from the 16th to 18th century. This encouraged imperialism and colonialism until economic and political changes resulted in global decolonization. Mod capitalism has favored costless merchandise to accept advantage of increased efficiency due to national comparative reward and economies of calibration in a larger, more universal market place. Some critics^{[ who? ]} have applied the term neo-colonialism to the power imbalance between multi-national corporations operating in a gratuitous market vs. seemingly impoverished people in developing countries.

Mixed economy [edit]

There is no precise definition of a "mixed economy". Theoretically, information technology may refer to an economic system that combines ane of three characteristics: public and private ownership of manufacture, market-based allocation with economic planning, or gratuitous markets with land interventionism.

In exercise, "mixed economy" by and large refers to market economies with substantial state interventionism and/or sizable public sector aslope a dominant private sector. Actually, mixed economies gravitate more heavily to one end of the spectrum. Notable economic models and theories that take been described every bit a "mixed economic system" include the following:

Georgism – socialized rents on land
Mixed economy (It can be categorized under many titles)
- American School
- Dirigisme (Government directed capitalist economy)
- Indicative planning, also known as a planned market economy
- Japanese organization
- Nordic model (Social democrat economic science of Nordic countries)
- Progressive utilization theory
- Corporatism (Basis of fascist economics)
- Social marketplace economy, also known as Soziale Marktwirtschaft (Mixed backer)
- New Economic Policy (Mixed socialist)
- Country commercialism (Government dominated capitalist economy)
- Socialist Market place Economy (Mixed socialist)

[edit]

Socialist economical systems (all of which feature social buying of the means of production) can be subdivided by their coordinating mechanism (planning and markets) into planned socialist and marketplace socialist systems. Additionally, socialism tin exist divided based on their property structures between those that are based on public buying, worker or consumer cooperatives and common buying (i.e. non-ownership). Communism is a hypothetical stage of socialist development articulated by Karl Marx every bit "2nd stage socialism" in Critique of the Gotha Programme, whereby the economical output is distributed based on need and not simply on the basis of labor contribution.

The original conception of socialism involved the substitution of money every bit a unit of calculation and budgetary prices every bit a whole with calculation in kind (or a valuation based on natural units), with business and financial decisions replaced past engineering and technical criteria for managing the economy. Fundamentally, this meant that socialism would operate under different economic dynamics than those of capitalism and the price system.^[seven] Afterward models of socialism adult by neoclassical economists (nigh notably Oskar Lange and Abba Lerner) were based on the use of notional prices derived from a trial-and-error approach to achieve market clearing prices on the part of a planning agency. These models of socialism were called "market socialism" considering they included a part for markets, coin, and prices.

The primary accent of socialist planned economies is to coordinate product to produce economic output to directly satisfy economical demand as opposed to the indirect machinery of the profit organisation where satisfying needs is subordinate to the pursuit of turn a profit; and to advance the productive forces of the economic system in a more efficient mode while being immune to the perceived systemic inefficiencies (cyclical processes) and crisis of overproduction so that production would be field of study to the needs of social club as opposed to being ordered around capital accumulation.^[viii] ^[nine]

In a pure socialist planned economy that involves different processes of resource resource allotment, production and means of quantifying value, the use of coin would exist replaced with a different measure of value and accounting tool that would embody more accurate information virtually an object or resource. In practise, the economic organisation of the quondam Soviet Spousal relationship and Eastern Bloc operated as a command economy, featuring a combination of state-owned enterprises and central planning using the material balances method. The extent to which these economic systems achieved socialism or represented a viable alternative to capitalism is subject to debate.^[ten]

In orthodox Marxism, the mode of product is tantamount to the subject of this article, determining with a superstructure of relations the entirety of a given culture or stage of human development.

Components [edit]

There are multiple components of an economic organization. Determination-making structures of an economic system decide the use of economic inputs (the factors of production), distribution of output, the level of centralization in controlling and who makes these decisions. Decisions might be carried out by industrial councils, past a government agency, or past private owners.

An economic organisation is a system of production, resource allocation, commutation and distribution of goods and services in a order or a given geographic expanse. In ane view, every economic arrangement represents an attempt to solve three cardinal and interdependent bug:

What goods and services shall be produced and in what quantities?
How shall goods and services be produced? That is, by whom and with what resources and technologies?
For whom shall goods and services be produced? That is, who is to enjoy the benefits of the appurtenances and services and how is the total product to be distributed among individuals and groups in the club?^[xi]

Every economy is thus a organisation that allocates resources for exchange, production, distribution and consumption. The system is stabilized through a combination of threat and trust, which are the consequence of institutional arrangements.^[12]

An economic arrangement possesses the following institutions:

Methods of control over the factors or means of production: this may include ownership of, or holding rights to, the means of product and therefore may give ascension to claims to the proceeds from production. The means of production may be owned privately, by the state, by those who use them, or exist held in common.
A decision-making system: this determines who is eligible to make decisions over economic activities. Economic agents with decision-making powers can enter into binding contracts with ane another.
A coordination machinery: this determines how information is obtained and used in controlling. The two dominant forms of coordination are planning and markets; planning tin can be either decentralized or centralized, and the ii coordination mechanisms are not mutually exclusive and often co-exist.^[13]
An incentive arrangement: this induces and motivates economic agents to engage in productive activities. Information technology can be based on either fabric reward (compensation or cocky-interest) or moral suasion (for example, social prestige or through a democratic decision-making process that binds those involved). The incentive system may encourage specialization and the division of labor.
Organizational grade: in that location are two basic forms of organization: actors and regulators. Economical actors include households, work gangs and production teams, firms, joint-ventures and cartels. Economically regulative organizations are represented by the state and market authorities; the latter may be individual or public entities.
A distribution system: this allocates the proceeds from productive activity, which is distributed equally income amidst the economic organizations, individuals and groups within lodge, such as property owners, workers and non-workers, or the state (from taxes).
A public selection machinery for constabulary-making, establishing rules, norms and standards and levying taxes. Unremarkably, this is the responsibility of the land, but other ways of commonage decision-making are possible, such as chambers of commerce or workers' councils.^[14]

Typology [edit]

Common typology for economic systems categorized past resource buying and resource resource allotment mechanism

There are several basic questions that must exist answered in order for an economic system to run satisfactorily. The scarcity problem, for instance, requires answers to basic questions, such as what to produce, how to produce it and who gets what is produced. An economic system is a way of answering these bones questions and different economic systems reply them differently. Many different objectives may be seen as desirable for an economy, like efficiency, growth, freedom and equality.^[15]

Economic systems are commonly segmented by their property rights authorities for the ways of product and by their dominant resource resource allotment mechanism. Economies that combine private buying with market allocation are called "market capitalism" and economies that combine private ownership with economic planning are labelled "command commercialism" or dirigisme. Likewise, systems that mix public or cooperative ownership of the means of production with economic planning are called "socialist planned economies" and systems that combine public or cooperative ownership with markets are called "market socialism".^[16] Some perspectives build upon this basic nomenclature to accept other variables into business relationship, such as grade processes within an economy. This leads some economists to categorize, for case, the Soviet Union's economy every bit state capitalism based on the analysis that the working class was exploited by the political party leadership. Instead of looking at nominal buying, this perspective takes into business relationship the organizational form within economic enterprises.^[17]

In a capitalist economic system, production is carried out for private profit and decisions regarding investment and allocation of factor inputs are determined by business owners in factor markets. The ways of production are primarily owned by private enterprises and decisions regarding production and investment are determined by private owners in upper-case letter markets. Capitalist systems range from laissez-faire, with minimal authorities regulation and state enterprise, to regulated and social market place systems, with the aims of ameliorating market failures (see economical intervention) or supplementing the private marketplace with social policies to promote equal opportunities (run across welfare state), respectively.

In socialist economic systems (socialism), production for utilise is carried out; decisions regarding the use of the means of production are adjusted to satisfy economical need; and investment is determined through economic planning procedures. There is a wide range of proposed planning procedures and ownership structures for socialist systems, with the common feature among them being the social ownership of the means of production. This might take the grade of public ownership by all of the club, or ownership cooperatively by their employees. A socialist economical arrangement that features social buying, only that it is based on the process of uppercase accumulation and utilization of uppercase markets for the allocation of upper-case letter goods between socially owned enterprises falls under the subcategory of market socialism.

By resources allotment mechanism [edit]

The basic and general "modern" economic systems segmented by the criterium of resource resource allotment machinery are:

Market economy ("hands off" systems, such as laissez-faire commercialism)
Mixed economy (a hybrid that blends some aspects of both marketplace and planned economies)
Planned economic system ("hands on" systems, such as land socialism, also known as "command economic system" when referring to the Soviet model)

Other types:

Traditional economy (a generic term for older economic systems, opposed to modernistic economic systems)
- Non-monetary economic system (without the use of coin, opposed to monetary economy )
- Subsistence economy (without surplus, commutation or market trade )
- Gift economy (where an substitution is made without whatever explicit understanding for immediate or future rewards and profits )
- Barter economy (where goods and services are direct exchanged for other goods or services)
Participatory economics (a decentralized economic planning system where the product and distribution of appurtenances is guided by public participation )
Post-scarcity economic system (a hypothetical form where resources aren't deficient)

Past ownership of the means of product [edit]

Capitalism (individual buying of the means of production )
Mixed economy
Socialist economy (social buying of the means of production)

By political ideologies [edit]

Diverse strains of riot and libertarianism advocate unlike economic systems, all of which have very small or no government involvement. These include:

Left-wing
- Anarcho-communism
- Anarcho-syndicalism
- Anarcho-socialism
Right-wing
- Anarcho-capitalism
Libertarianism
- Libertarian socialism
- Syndicalism

By other criteria [edit]

Corporatism refers to economical tripartite involving negotiations between business, labor and state interest groups to constitute economic policy, or more generally to assigning people to political groups based on their occupational amalgamation.

Certain subsets of an economic system, or the particular goods, services, techniques of production, or moral rules can also exist described as an "economic system". For case, some terms emphasize specific sectors or externalizes:

Round economy
Collectivist economy
Digital economic system
Dark-green economy
Information economy
Cyberspace economy
Noesis economy
Natural economy
Virtual economy

Others emphasize a particular religion:

Arthashastra – Hindu economic science
Buddhist economic science
Distributism – Catholic ideal of a "third fashion" economic system, featuring more than distributed ownership in a mixed economic system
Islamic economics

The type of labour ability:

Slave – and serf -based economic system
Wage labour -based economy

Or the ways of production:

Agrestal economic system
Industrial economy
Data economy

Evolutionary economics [edit]

Karl Marx'south theory of economic development was based on the premise of evolving economical systems. Specifically, in his view over the course of history superior economic systems would supersede inferior ones. Inferior systems were beset by internal contradictions and inefficiencies that would brand it impossible for them to survive long-term. In Marx'due south scheme, bullwork was replaced by capitalism, which would eventually be superseded past socialism.^[18] Joseph Schumpeter had an evolutionary formulation of economic development, but unlike Marx he de-emphasized the role of form struggle in contributing to qualitative change in the economic manner of production. In subsequent world history, many communist states run co-ordinate to Marxist–Leninist ideologies arose during the 20th century, only by the 1990s they had either ceased to exist or gradually reformed their centrally planned economies toward market-based economies, for example with perestroika and the dissolution of the Soviet Wedlock, Chinese economic reform and Đổi Mới in Vietnam.

Mainstream evolutionary economic science continues to written report economic alter in modern times. There has also been renewed involvement in understanding economical systems as evolutionary systems in the emerging field of complexity economics.

Run into also [edit]

Capitalism
Communism
Economic ideology
Economy
Factors of production
History of economical idea
Style of production
Participatory economic science
Political economy
Socialism
Social relations of product
Socialist calculation debate
Superstructure

References [edit]

^ Daniel J. Cantor, Juliet B. Schor, Tunnel Vision: Labor, the World Economy, and Fundamental America, South End Press, 1987, p. 21: "By economic system or economic gild, nosotros mean the principles, laws, institutions, and understandings business is conducted."
^ Gregory and Stuart, Paul and Robert (Feb 28, 2013). The Global Economic system and its Economical Systems. South-Western College Pub. p. xxx. ISBN978-1285055350. Economic organization – A set of institutions for decision making and for the implementation of decisions concerning production, income, and consumption inside a given geographic surface area.
^ Samuelson, P. Anthony., Samuelson, West. (1980). Economics. 11th ed. / New York: McGraw-Hill. p. 34
^ Rosser, Mariana Five. and J Barkley Jr. (July 23, 2003). Comparative Economics in a Transforming World Economy . MIT Printing. pp. 1. ISBN978-0262182348. Chapter 1 presents definitions and bones examples of the categories used in this volume: tradition, market, and control for allocative mechanisms and commercialism and socialism for ownership systems.
^ • Paul A. Samuelson and William D. Nordhaus (2004). Economic science, McGraw-Hill, Glossary of Terms, "Mixed economy"; ch. 1, (department) Market place, Command, and Mixed Economies.
• Alan V. Deardorff (2006). Glossary of International Economics, Mixed economy.
^ JEL classification codes, Economic systems JEL: P Subcategories
^ Bockman, Johanna (2011). Markets in the name of Socialism: The Left-Wing origins of Neoliberalism. Stanford Academy Press. p. 20. ISBN978-0-8047-7566-3. According to nineteenth-century socialist views, socialism would function without capitalist economic categories – such as money, prices, interest, profits and rent – and thus would function according to laws other than those described past current economic science. While some socialists recognized the demand for money and prices at least during the transition from commercialism to socialism, socialists more normally believed that the socialist economy would soon administratively mobilize the economy in concrete units without the employ of prices or money.
^ Socialism: Still Impossible After All These Years, on Mises.org. Retrieved February 15, 2010, from Mises.org https://mises.org/journals/scholar/Boettke.pdf, What Socialism means: " The ultimate stop of socialism was the 'end of history', in which perfect social harmony would permanently be established. Social harmony was to be achieved past the abolitionism of exploitation, the transcendence of alienation, and above all, the transformation of society from the 'kingdom of necessity' to the 'kingdom of freedom.' How would such a world exist accomplished? The socialists informed usa that by rationalizing production and thus advancing material production beyond the premises reachable under commercialism, socialism would usher mankind into a post-scarcity world."
^ Socialism and Adding, on worldsocialism.org. Retrieved February 15, 2010, from worldsocialism.org: http://world wide web.worldsocialism.org/spgb/overview/calculation.pdf Archived 2011-06-07 at the Wayback Machine: "Although money, and then monetary adding, will disappear in socialism this does not hateful that there volition no longer be any need to make choices, evaluations and calculations...Wealth volition be produced and distributed in its natural form of useful things, of objects that can serve to satisfy some human need or other. Non being produced for sale on a market place, items of wealth will not acquire an exchange-value in addition to their use-value. In socialism their value, in the normal non-economic sense of the word, will non exist their selling price nor the time needed to produce them simply their usefulness. Information technology is for this that they will be appreciated, evaluated, wanted. . . and produced."
^ "What was the USSR? Part I: Trotsky and state commercialism". Libcom.org. 2005-04-09. Retrieved 2014-08-xv .
^ Paul A Samuelson, Economics: An Introductory Analysis, 1964, International Student Edition, New York: McGraw-Loma and Tokyo: Kōgakusha, p. 15
^ Kenneth E Boulding, Economic science equally a Science, 1970, New York: McGraw-Colina, pp. 12–15; Sheila C Dow, Economical Methodology: An Research, Oxford: Oxford University Press, p.58
^ S. Douma & H. Schreuder (2013), Economic Approaches to Organizations, 5th edition, Harlow (UK): Pearson
^ Paul R Gregory and Robert C Stuart, The Global Economic system and its Economic Systems, 2013, Independence, KY: Cengage Learning, pp. 21–47 ISBN i-285-05535-seven; Erik Grand Furubotn and Rudolf Richter, Institutions and Economic Theory: The Contribution of the New Institutional Economics, 2000, University of Michigan Printing, pp. 6–15, 21 and 30–35 ISBN 0-472-08680-iv; Warren J Samuels, in Joep T J M van der Linden and André J C Manders (editor), The Economics of Income Distribution: A Heterodox Approach, 1999, Cheltenham: Edward Elgar, p. xvi ISBN 1-84064-029-four
^ David W. Conklin (1991), Comparative Economical Systems, University of Calgary Printing, p.1.
^ Rosser, Mariana Five. and J Barkley Jr. (July 23, 2003). Comparative Economics in a Transforming World Economy . MIT Press. pp. 8. ISBN978-0262182348. This leads united states to describe 2 farthermost categories: market capitalism and control socialism. But this elementary dichotomization raises the possibility of "cross forms,", namely, market socialism and control capitalism. Although less mutual than the previous two, both take existed.
^ Rosser, Mariana V. and J Barkley Jr. (July 23, 2003). Comparative Economics in a Transforming World Economy . MIT Press. pp. eight. ISBN978-0262182348. Indeed, bated from the variation of buying forms, some follow certain ideas in Marx, saying that how ane course relates to another is the crucial matter rather than specifically who owns what, with true socialism involving a lack of exploitation of one class by some other. This kind of argument can pb to the position that the Soviet Spousal relationship was non really socialist but a form of state capitalism in which the government leaders exploited the workers.
^ Comparing Economic Systems in the 20-Showtime Century, 2003, by Gregory and Stuart. ISBN 0-618-26181-8.

External links [edit]

Economic system at Encyclopædia Britannica entry.
"Social Studies VSC Glossary".
Glossary-Cultural "Anthropology".
"Economic Systems", a refereed journal for the analysis of market and not-marketplace solution by Elsevier since 2001.
"Economic Systems" by WebEc, 2007.

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Source: https://en.wikipedia.org/wiki/Economic_system