Menu Close

Oklahoma’s Economic Systems

There is much more economic inequality in capitalism than in socialism. Although capitalism produces economic growth, not all segments of capitalism share this growth equally, and there is a much greater difference between the rich and poor than under socialism.

People can become very rich in capitalist nations, but they can also remain quite poor. As we saw in Chapter 9 “Global Stratification”, several Western European nations that are more socialist than the United States have fewer extremes of wealth and poverty and take better care of their poor. An economic system in which the means of production are collectively owned, usually by the government. An economic system in which the means of production are privately owned. Socialism is an economic and political system based on public or collective ownership of the means of production which emphasizes economic equality. Economics is a branch of social science focused on the production, distribution, and consumption of goods and services.

The government causes these decisions based about its perception of just what is best for modern society. Critics argue that a new free market economy does indeed not serve all folks. Just accommodates those buyers who have the money to buy products. Those without enough money are overlooked and left out of the marketplace.

Economic System

A command economy is a system where the government determines production, investment, prices and incomes. This suggests that the mixed economy is inherently unstable and will always tend toward a more socialistic state over time. Classical and Marxist theorists say that either the law of value or the accumulation of capital is what drives the economy, or that non-monetary forms of valuation (i. e. transactions without cash) are what ultimately propel the economy.

A free market economy begins to take over, as traditional values change. In a free market, consumers become the dominant force, and producers make products that people want to buy. Traditional economic systems are found mostly in primitive, farming societies. Small business owners must have an awareness of the type of economy in which they operate. This is important, because the firm must adapt to changes in the economic system. In part, it is because it is the most dynamic and materially successful economic system ever developed by using markets to organize production. With the collapse of communism, the market subsystem of capitalism has come to dominate global economic activity.

These theorists believe that Western economies remain primarily based on capitalism because of the continued cycle of accumulation of capital. Countries often interfere in markets to promote target industries by creating agglomerations and reducing barriers to entry in an attempt to achieve comparative advantage. This was common among East Asian countries in the 20th century development strategy known as Export Led Growth, and the region has turned into a global manufacturing center for a variety of industries. Some nations have come to are experts in textiles, while others are known for machinery, and others are hubs for electronic components. These sectors rose to prominence after governments protected young companies as they achieved competitive scale and promoted adjacent services such as shipping. All known historical and modern economies are examples of mixed economies, though some economists have critiqued the economic effects of various forms of mixed economy. Mixed economies socialize select industries that are deemed essential or that produce public goods.

Regulation � The government can set regulations of any kind in any industry. An example would be the government regulation that states seatbelts and airbags are mandatory in the automobile industry. Regulation often creates new markets that are then ruled by capitalism.

One more word about economic systems, while there are only three basic categories of economic systems there are a large variety of subcategories of these systems. Since the central political authority controls the allocation of resources it doesn’t have to be concerned with tradition or the institutions of markets to recognize the need for production. What I’m getting at here is not to says that justice is a relative concept, I’m saying that people in a standard society tend to see the existing social arrangements as just. He then argued that the economic system that causes society to make the most of these gains is the market system – but more about this later. So, I’m saying that people are social animals in order to facilitate our economic lives.